Mt. Hayes Liquefied Natural Gas Storage Facility Terasen ... · PDF fileLiquefied Natural Gas...

Mt. Hayes Liquefied Natural Gas Storage Facility Terasen Gas (Vancouver Island) Inc.

Stakeholder Workshop for theCPCN Application

June 27th, 2007 Coast Bastion Inn, Nanaimo BC

2

Overview

• Peak shaving storage facility located near Ladysmith on Vancouver Island

• Design and operation similar to current facility located on Tilbury Island in Delta BC

• Natural Gas is transported to facility via existing pipeline system during summer months, stored as LNG and then sent out during winter peaking periods

• Current project based on 2004 proposal that was approved by the BCUC but subsequently deferred due to termination of Duke Point Power Project

Proposed LNG Storage

facility

3

Proposed Mt Hayes Facility

Capacity 1.5 BcfLiquefaction 7.5 MMcfdDeliverability 150 MMcfdCapital Investment $176 million Target In-Service Date 2011

4

Welcome – Workshop Agenda

Introduction Cynthia Des Brisay Director, Business Development & Resource Planning

Project Overview and Description Guy Wassick, Project Manager

Gas Supply Portfolio Cynthia Des Brisay

TGVI System Benefits Edmond Leung Project Assessment Manager

Economic Justification Dave Perttula Manager, Market Development

Regulatory Process Review & Next Steps Tom Loski Director, Regulatory Affairs

Questions / Discussion All

5

Terasen Inc, a Fortis Company

6

Terasen Utilities

Management Structure

Terasen Gas(Vancouver Island) Inc

Terasen Gas (Whistler) Inc

Terasen Gas(Vancouver Island) Inc

Terasen Gas (Whistler) Inc

Terasen Storage IncTerasen EnergyServices Inc

LNG Storage Facility

Shared Services Agreements

Ownership StructureTerasen Inc

A Kinder Morgan CompanyTerasen Inc

A Fortis Company

Terasen Gas Inc Terasen Gas(Vancouver Island) Inc

Terasen Gas (Whislter) IncTerasen Gas Inc Terasen Gas

(Vancouver Island) IncTerasen Gas (Whistler) Inc

Terasen Storage LtdTerasen Energy Services Inc

Terasen Gas IncTerasen Gas Inc

7

Project Justification

• 2006 Integrated Resource Plan concludes Mt Hayes is a cost effective long term resource for Terasen Gas– Provides long term storage capacity to meet core market peak day

growth on Vancouver Island and the Lower Mainland– Reduces dependence on storage facilities located in Washington

and Oregon states to serve residential and commercial customers– Avoids transmission facility additions on the Vancouver Island

transmission system and the Coastal Transmission System– On-System storage facility enhances reliability and security of

supply – Allows the utilities to better manage future industrial and

generation demand uncertainty (Island Cogen and Burrard Thermal)

8

Optimization and Allocation of Storage Capacity &

Deliverability

Benefits from Mt. Hayes Project- System Capacity and Gas Supply

TGVIGas

Supply

TGVIMt. Hayes LNG

1.5 bcf150 mmcfd

TGVISystem

Capacity

0.5

bcf

50 m

mcf

d

TGIGas Supply 1.

0 bc

f10

0 m

mcf

d

Guy WassickLNG Project Manager

Terasen Gas (Vancouver Island) Inc.

Project Description & Overview

10


• LNG Intro & General • Site Selection and Public Consultation• Environmental Assessment• 2007 & 2004 Projects Comparison• Mt. Hayes LNG Storage Facility• Project Schedule & Cost• Project Management• Local Impacts

11

What Is LNG?

• LNG (liquefied natural gas) is natural gas cooled until it condenses into a clear liquid.

• LNG is stored at -162o Celsius (-260o F) at atmospheric pressure in a “thermos”like storage container.

• LNG takes up far less space – about 1/600th of its original volume as a gas.

• LNG (the liquid itself) is not flammable or explosive.

• When LNG is warmed it evaporates and becomes a lighter-than-air gas and is flammable only when it occurs in a 5% to 15% concentration in air.

12

Types of LNG Facilities• Peak Shaving:

LNG storage with liquefaction and vaporization capability; send out on peak days; connected to a pipeline system

• Terminals, Import & Export:Large storage capacity and continuous operation;–Export - liquefaction of a pipeline supply to load marine tankers–Import – receipt of marine tanker supply, with base load sendout to a pipeline system

• Satellite Plants:For peaking or smaller base load send out; supplied by truck transport; with vaporization capability only

• Transportation Fuel: Cars, trucks & buses

13

The LNG Industry

• There are over 240 LNG storage facilities operating in the world.

• In North America there are approximately 110 peak shaving facilities (3 located in Canada) and 4+ import/export terminals.

• LNG storage tanks are insulated tanks, operating at atmospheric pressure and constructed of 9% nickel steel; no tank of this design has failed in service anywhere in the world.

14

LNG Facilities – North America

15

Tilbury Island (Delta, B. C.)“Peak shaving” LNG Plant (1970) - 0.6 bcf

16

Tilbury Island (Delta, B. C.)“Peak shaving” LNG Plant – 0.6 bcf

17

Major Components OfPeakshaving LNG

• Liquefaction(freezer)

• Storage(thermos)

• Vaporization(hot water tank)

Preheater

Boil-off Compressor

LNG Vaporizers

LNG Tank

LNG TankerUnloading &Loading

to TransmissionPipeline System

LNG Pumps

Feed Gas

Tail Gas

DessicationLiquefaction

18

Site Selection Process

• Terasen Gas examined a strip of land 5 km on either side of the main natural gas transmission pipeline from the Courtenay area down to the Langford area to locate a storage facility of up to 1.5 bcf.

• Based on this analysis, 25 potential sites were identified.

• Further analysis of slope, geotechnical characteristics, view sheds and pipeline system hydraulics reduced potential sites to seven, then to three, and then finally the Mt. Hayes site was selected.

19

Final Site – Near Ladysmith

LNG Storage

• Proposed facility– Storage 1-1.5 bcf– Send-out 100-150

mmcf/d– Liquefaction 5 –

7.5mmcf/d

• 6km NW of Ladysmith, West of Mt. Hayes

• Located near load center on Southern Vancouver Island

20

Storage Plant Location

21

Consultation Process

TGVI undertook a comprehensive public consultation process over a period of 12 months which included the following key elements.

• Letters to stakeholders• Meetings with and presentations to stakeholders• 2 focus groups • 3 Open Houses• CVRD sponsored Public Meeting • Environmental and Social Review (ESR)• CVRD Public Hearing

Site re-zoning approved by CVRD May 26/04

22

Consultation Process - Ongoing

TGVI has maintained communication with interested parties in the community, including direct contact with:

• Cowichan Valley Regional District• Chemainus First Nation• Cowichan Tribes• Regional District of Nanaimo• Municipalities of Ladysmith and Nanaimo

TGVI’s 2006 Resource Plan which identified the LNG Storage Project as the next major capital addition was widely communicated with TGVI stakeholders.

23

LNG Storage Facility Site Details

New zone is U-1, LNG Storage Utility

• 42.7 ha (105 acres) rezoned• 12 ha (30 acres) facility fenced site• 20 ha (49 acres), western and eastern buffers,

beyond rezoned area will be retained in forestry operations

• Total 82 ha (204 acres) will be owned or controlled by TGVI

24

Private Property Purchased

Property to be purchased

142 ha

25

Rezoned Area

42 ha

Rezoned

Area

26

Proposed Storage Plant Area

Plant area

12 ha

27

Land Owned or Controlled by TGVI

Exclusion Zone

Total area 82 ha

28

2007 & 2004 Storage Projects

2004 2007Storage Tank

Storage Volume 1.0 Bcf 1.5 BcfApprox. Tank Height 40 m. 40 m.

Approx. Tank Diameter 48 m. 60 m.Facility

Facility Area 12 ha. 12 ha.Liquefaction Rate 5.0 mmcfd 7.5 mmcfd

Max. Sendout Rate 100 mmcfd 150 mmcfd

Comparison of Proposed Storage Facilities

29

Summary of Project EnvironmentalImpact Significance

Impact Significance* Impact Topic

Unmitigated Mitigated PHYSICAL ENVIRONMENT

• Geology and Soils N N • Natural Hazards N N • Water and Aquatic Systems S N • Air Quality and Climate N N

BIOLOGICAL ENVIRONMENT

• Vegetation S N • Wildlife N N • Fish and Fish Habitat N N

* N = Not Significant S = Significant B = Beneficial N/A = Not applicable, project design and construction standards incorporate these requirements U = Unknown due to lack of information

30

Summary of Project Environmental Impact Significance


Unmitigated Mitigated HUMAN ENVIRONMENT

• Urban and Rural Settlement N N • Transportation N N • Forestry N N • Recreation N N • Archaeology N N • Aesthetics N N • Noise N N • Domestic Water Supply N N • Economic Effects B B


31

Summary of Project EnvironmentalImpact Significance


Unmitigated Mitigated FACILITY AND PUBLIC SAFETY

• Forest Fires N/A N • Seismicity N/A N • Facility Integrity N/A N • Pipeline Integrity N/A N • LNG Transportation N/A N • Site Security N/A N

CUMULATIVE EFFECTS

• Construction N N • Operation N N


32

Environmental Assessment:Key Human Impact Findings

• 3 km from facility to nearest dwelling• Traffic effects on existing roads limited to

construction period• Little impact on forestry or recreation• Minimal aesthetics and noise impacts

-3 kms to nearest dwelling-Landscape is already heavily disturbed

• Unaffected domestic water supplies-Outside of aquifer recharge areas

Location of the site in an isolated area mitigates most human and safety impacts

33

Environmental Assessment:Key Biophysical Findings

The site is privately owned and has already been disturbed, reducing impacts on physical and biological environment

• Site is mostly clearcut• Site is geologically stable• Aquatic and vegetation impacts can be mitigated• Intermittent streams (non fish bearing) will be

channelized, a pond created, replacing the present bog

• No effect on fish• Little effect on wildlife

34

2003 Site Photograph

Mt. Hayes in background - view to east

Tank Location

35

Artist Rendering

36

Layers of Safety

1. Design to LNG specific standards, using proven LNG technology and materials.

2. Isolation and containment systems in all systems in the facility.

3. Safeguard systems – detection, shut-down, fire-fighting; 24/7 on-site personnel and monitoring from gas control centre.

4. Separation distances per code requirements.5. Proven operating, maintenance and emergency

standards and procedures.

37

Design/Safety Features

• Insulated, non pressurized, 9% nickel steel inner tank (like a thermos)

• 100% secondary containment around tank• Controlled buffer zone around facility • Safeguard systems (eg: fire/smoke/gas

detection, automatic/remote control, manned full time) designed for isolation/containment and shut-down

• Fire water system, water deluge and dry chemical extinguishers

LNG facilities are designed to isolate segments, contain fluid and shut down.

38

Typical 9% Nickel Steel Tank Design

39

Application Projects

• LNG Storage Facility Project:– Site Preparation, Pond, Power Line, Substation and

Restoration– LNG Storage Facility (by EPC Contractor)

• System Facilities Project:– Pipeline laterals– Gas measurement/odourization station– Reverse flow modifications on existing pipeline

system

40

LNG Storage Facility Project Schedule

• Per Application – Schedule

ID Task Name Duration

1 BCUC 5.5 mons2 Application Preparation 2 mons3 Application Approval 3.5 mons4 UPDATING PHASE 5 mons5 LNG Facility EPC 5 mons6 Contract Negotiation 2 mons7 Design Development 2 mons8 Geotechnical Evaluation 2 mons9 Cost Development 3 mons10 Owner's Project Work 3 mons11 Power Line Update 2 mons12 Site Prep Design/Contract 3 mons13 ESR Update 2 mons14 APPROVALS UPDATING 3 mons15 OGC - Facility 3 mons16 Prov Ministries - Permits 2 mons17 DECISION TO PROCEED 0 mons18 ONGOING COMMUNICATION 49 mons19 LAND 3 mons20 Exercise Site Option 0 mons21 R-O-W Acquisition 3 mons22 CONSTRUCTION 41 mons23 LNG Facility Project Work 12 mons24 Site Grading 4 mons25 Road Improvements 3 mons26 R-O-W Preparation 3 mons27 Power Line 3 mons28 LNG Facility EPC 37 mons29 Facility EPC On-Site 30 mons30 Commission & Test 3 mons31 Final Acceptance 4 mons32 FILLING 5 mons33 Operation by TGVI 5 mons34 RESTORATION 3 mons

Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 42007 2008 2009 2010 2011

41

System Facilities Project Schedule

ID Task Name Duration

1 BCUC 5.5 mo2 Application Preparation 2 mo3 Application Approval 3.5 mo4 UPDATING PHASE 3 mon5 Design & Cost Update 2 mo6 ESR Update 2 mo7 OGC - Facilities 2 mo8 Prov Ministries - Permits 2 mo9 DECISION TO PROCEED - LNG 0 mo10 DECISION TO PROCEED 0 mo11 ONGOING COMMUNICATION 35 mo12 LAND 3 mon13 R-O-W Acquisition 3 mo14 TGVI PROJECT WORK 40 mo15 R-O-W's Preparation 3 mo16 Pipelines 6 mo17 Gas Msmt/Odour Faciity 6 mo18 Reverse Flow Facilities 6 mo

Qtr 1Qtr 2Qtr 3Qtr 4Qtr 1Qtr 2Qtr 3Qtr 4Qtr 1Qtr 2Qtr 3Qtr 4Qtr 1Qtr 2Qtr 3Qtr 4Qtr 1Qtr 2Qtr 3Qtr 42007 2008 2009 2010 2011

42

2007 Pre-Construction Development

• Minimize capital costs and reduce uncertainty• Communicate and prepare with stakeholders• Confirm project scheduleKey Activities:

– EPC Contract negotiation and cost/schedule development

– Update the cost estimates for non-EPC work – Update the Environmental & Social Review– Update the Geotechnical report for the 1.5 Bcf facility

43

LNG Storage Facility Project Costs

P10 P50 P901.5 Bcf LNG Facility $154.9 $165.0 $185.71.0 Bcf LNG Facility $116.3 $124.9 $140.8

P10 P50 P901.5 Bcf LNG Facility $155.7 $166.0 $186.81.0 Bcf LNG Facility $116.8 $125.7 $141.6

LNG Storage Facility Costs (Direct 2007$ millions)

LNG Storage Facility Costs (AsSpent$ millions)

44

System Facilities Project Costs

P10 P50 P90Pipelines $6.0 $6.4 $6.8

Msmt & Odour Stn $0.8 $0.8 $0.9Reverse Flow Facilities $2.1 $2.4 $2.7

Project Management $0.1 $0.1 $0.1Contingency $0.5 $1.0 $1.5

Projects for 1.5 Bcf Facility $9.5 $10.7 $12.0Projects for 1.0 Bcf Facility $6.3 $7.1 $7.9

P10 P50 P90Projects for 1.5 Bcf Facility $10.4 $11.6 $13.2Projects for 1.0 Bcf Facility $6.9 $7.8 $8.7

System Facilities Costs (AsSpent$ millions)

System Facilities Costs (Direct 2007$ millions)

45

Terasen Gas Project Management

Managing LNG Storage Facility and System Facilities Projects

• Terasen Gas team managing all the work;– Project managers– Administrative functions (purchasing, financial,

engineering, environmental, safety)– Operations (LNG and pipeline)– Communications

• LNG Facility– Experienced EPC Contractor providing a turnkey

facility– TGVI consultants for design and construction

management

46

System Facilities Project Execution

Managed by the Terasen Gas project team;• Individual projects are “typical” projects for

Terasen Gas and will be managed engaging;– Internal engineering and project management

resources– Local consultants, suppliers and contractors as

required• Similar process for TGVI directed work on the

LNG Storage Facility Project (site preparation, power line and substation, site work outside the facility fence).

47

LNG Storage Project Execution

EPC Contractor provides LNG engineering, procurement and construction execution expertise– For non-LNG specific work, typically engage local

consultants, suppliers and contractors, e.g.;• Civil, electrical, mechanical, buildings subcontracts• General construction support services• Materials and supplies locally available• Local labour and equipment resources

– For LNG specific construction, engagement of local construction resources directed by EPC Contractor’s LNG expertise;

• Local skilled trades and general labour requirements

48

Socio-Economic Impacts

LNG Storage Facility Project will positively impact, and help to diversify, the existing economy.

Total construction expenditures $165 Million• $50 M of local expenditures; $73 M in British Columbia • 290 person-years of local employment (120 direct, 170

indirect/induced)• 840 person-years of B.C. employment (180 direct, 660

indirect/induced)

Facility operation provides;• 9 full-time jobs• $150,000/year in local goods and services expenditures• Local property taxes

Gas Portfolio Benefits

50

Overview

• Sourcing Natural Gas– Upstream Supply and Transportation Resources

• Overview of gas supply planning at Terasen Gas– Meeting Future Peak Load Growth– Infrastructure projects have long lead times

• Regional Resource Options Available– Current and Future

– Best Fit for TGI/TGVI

• Market Valuation of Resources Options

51

Gas Supply Planning Criteria / Managing Risks• Build supply diversity into portfolio

Ideally have multiple suppliers, pipelines, storage resources, supply basins.Attempt to limit exposure to problems associated with a single source.

• Support regional infrastructure planning-NWGA

Work cooperatively with other utilities in the region.Ensure adequate supply.Infrastructure projects have long lead times.Add resources that reduce price volatility.

• Manage price riskStore gas in summer Use financial tools (buy at fixed prices in advance).

• Build a flexible plan

52

2006/07 TGI Normal and Design Load vs SupplyTypical Resource Fit

Create a portfolio to meet Design Peak Day RequirementsBaseload/Seasonal Pipeline for average day supply Shorter-term pipeline contracts and upstream storage for winter average day Market Area storage most efficient for short term peaks

Provide security of supply in event of failuresPipeline capacity sets a price cap

0

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

01/11/

2006

15/11/

2006

29/11/

2006

13/12/

2006

27/12/

2006

10/01/

2007

24/01/

2007

07/02/

2007

21/02/

2007

07/03/

2007

21/03/

2007

04/04/

2007

18/04/

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02/05/

2007

16/05/

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30/05/

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13/06/

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27/06/

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11/07/

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25/07/

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08/08/

2007

22/08/

2007

05/09/

2007

19/09/

2007

03/10/

2007

17/10/

2007

31/10/

2007

TJ/d

Peaking Resources

Market Area Storage/Shaped PipelineCapacityPipeline Capacity

Design

Normal

Design Peak Day

53

Meeting Future Demand Growth

• As peak day grows each year need combination of pipe/incremental shorter duration resources…..

• Regional Issues– Growth in peak day

requirements is higher than average day.

– All utilities in our region face need to add new resources to meet growth.

– Availability of Shaped Resources vs baseload

– Large infrastructure projects require longer lead times

0

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

01/11/

2006

15/11/

2006

29/11/

2006

13/12/

2006

27/12/

2006

10/01/

2007

24/01/

2007

07/02/

2007

21/02/

2007

07/03/

2007

21/03/

2007

04/04/

2007

18/04/

2007

02/05/

2007

16/05/

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30/05/

2007

13/06/

2007

27/06/

2007

11/07/

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25/07/

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08/08/

2007

22/08/

2007

05/09/

2007

19/09/

2007

03/10/

2007

17/10/

2007

31/10/

2007

TJ/d

Peaking Resources

Market Area Storage/Shaped PipelineCapacity

Pipeline Capacity

Design

Design Peak Day

54

Regional Resource Options

Upstream Supply/Storage

Pipeline Capacity

Market Area Storage

On System Resources

Pipeline Capacity

55

Market Area Storage InfrastructureOn and Off System Alternatives

• Off System Storage– JPS Expansion

• Up to 300 MMcfd• One third contracted

for avg term 32 years• Redelivery More

Expensive (30-50% of Firm NWP Rate)

– Mist Expansion• Potential for Future

Expansions• Issue of Redelivery

• On System– Tilbury LNG Storage

Expansion– Proposed Mount Hayes

Storage

On System Storage

56

Valuation of Resource Alternatives

• Downstream storage value based on – Incremental JPS Storage based

on recent expansion offering– Redelivery based on discounted

NWP TF1 transport rate• Pipeline Capacity based on

– T-South tolls with and without mitigation

– Mitigation based on full recovery of demand charges in winter

JPS + TF-1@30%JPS + TF-1@50%T-South (with mitigation)T-South (no mitigation)

Equivalent Cost for 10 Day Service

$180

$115

$131 $137

Annual Cost of Market Area Storage Deliverability to Huntingdon ($ per GJ)

57

The Need for Storage Resources

58

Gas Portfolio Summary• New Resources required to meet future peak growth

and manage expiring contractsInfrastructure projects have long lead times

• Pipeline Expansions– No Expansion on T-South in the near term– No Expansion North of JPS scheduled

• Storage Expansions– JPS Expansion and potential Mist Expansion– Firm redelivery will cost more than existing contracts

• On System resource better fit– Security of Supply– Value of resource comparable to cost of Off System Market Area

Storage and/or Westcoast Pipe

59

Valuation of Resource Alternatives

• Downstream storage value based on – Incremental JPS Storage

based on recent expansion offering

– Redelivery based on discounted NWP TF1 transport rate

• Pipeline Capacity based on– T-South tolls with and without

mitigation– Mitigation based on full

recovery of demand charges in winter

JPS + TF-1@30%JPS + TF-1@50%T-South (with mitigation)T-South (no mitigation)

Equivalent Cost for 10 Day Service

$180

$99

$130 $132

Annual Cost of Market Area Storage Deliverability to Huntingdon ($ per GJ)

60

Transmission System BenefitsEdmond Leung

Project Assessment Manager

61

Topics

• System Overview• Load Requirements• Resource Portfolio Options

– The pipeline and compression option– Local gas storage option

• Pipeline System Benefits from Local Gas Storage

63

Coastal Transmission System

FRASER VALLEY

-

METROVANCOUVER

-COQUITLAM

LangleyComp Stn

Nichol-Coquitlam Loop

64

Coquitlam Stn

Texada Stn

Pt. Mellon

Stn

TGVI Transmission System

65

Meeting Future Demand Growth

0

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

01/11

/2006

15/11

/2006

29/11

/2006

13/12

/2006

27/12

/2006

10/01

/2007

24/01

/2007

07/02

/2007

21/02

/2007

07/03

/2007

21/03

/2007

04/04

/2007

18/04

/2007

02/05

/2007

16/05

/2007

30/05

/2007

13/06

/2007

27/06

/2007

11/07

/2007

25/07

/2007

08/08

/2007

22/08

/2007

05/09

/2007

19/09

/2007

03/10

/2007

17/10

/2007

31/10

/2007

TJ/d

Peaking Resources

Market Area Storage/Shaped PipelineCapacity

Pipeline Capacity

Design

Design Peak Day

66

TGVI current System Capacity vs. Demand Projection

TGVI Design Day Forecast

0

50

100

150

200

250

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020Year beginning November

Tera

joul

es p

er D

ay

TGVI Core Squamish

Whistler VIGJV

ICP System Capacity

67

Pipe & Compression Portfolio

Coquitlam Stn

Texada Stn

Pt Mellon Stn

Squamish

Coquitlam

Sechelt

Dunsmuir

Crofton Nichol –Coquitlam Loop in the Coastal

Transmission System

Watershed Loop

68

Coquitlam Stn

Texada Stn

Port Mellon Stn

Gas Storage Portfolio

Mt. Hayes Storage

Coquitlam

Squamish

Dunsmuir

69

Gas Storage Benefit – Increase operational flexibility and efficiency

• Balancing– Weather forecast error ranging from 1 to 3 oC– LNG to make up shortfall– No need to follow 3rd party nomination cycle

• Reduce line-pack requirement– Currently relies on line-pack to meet transient demands, to manage

pressure upset from unplanned compressor shutdown or valve closure

– LNG can respond quickly with lower optimum line-pack • Increase O&M windows

– Currently O/M windows requiring pipeline isolation limited by line-pack available to downstream customers

– LNG would provide a secondary source of supply to extend O/M windows.

70

Gas Storage Benefit – Increase System Reliability

Coquitlam Stn

Texada Stn

Pt Mellon Stn

71

Gas Storage Benefit – Security of Supply

Coquitlam Stn

Texada Stn

Pt Mellon Stn

72

Pipeline System Benefits from Local Gas Storage

Summary• Reduced system capital costs for both TGVI System and Coastal

Transmission System• As a short duration resource (10 peak days) to match high peak

day growth• Increase operational flexibility and efficiency (balancing, reduce

line-pack requirement, increase O&M windows)• Increase system reliability• Increase security of supply

73

Financial Justification and Rate ImpactDave Perttula

74

Financial Evaluation Approach

• Components of the Financial Evaluation– Cost of Service of the LNG Facility – Gas Supply benefits for gas customers of TGVI and TGI

• On-system storage services at competitive rates• Reduced requirement to contract for storage in US Pacific Northwest

– TGVI System Benefits• Future expansion requirements of the TGVI transmission system are

greatly reduced with the LNG facility.

– Potential TGI System Benefits• Reduced future expansion of TGI CTS (some scenarios)

75

Storage Facility Cost of Service

• Storage Facility to be built, owned and operated by as part of TGVI transmission and distribution system

• Incremental revenue requirement based on TGVI’s cost of service methodology with adjustments– Fair return for investment (TGVI ROE + 50 BP)– Adjusted depreciation schedule to reduce up front costs

2.1%

2.1%

2.1%

2.2% 2.2%

2.2% 2.3% 2.4% 2.5% 2.6% 2.

8% 3.0% 3.

1% 3.3% 3.

5% 3.8% 4.

0% 4.3% 4.

6%

4.9%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

3.0%

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

2011

2013

2015

2017

2019

2021

2023

2025

2027

2029

2031

2033

2035

2037

2039

2041

$Milli

ons

Adjusted Depreciation

Straight Line Depreciation

76

Storage Facility Revenue Requirement

156

125

165

230

163

117

230

148

0

50

100

150

200

250

15 Year 25 Year 15 Year 25 Year

Pres

ent V

alue

Straight Line Depreciation

Adjusted Depreciation

----------6.2% Discount Rate---------- ----------10% Discount Rate----------

$Millions

77

Allocation of Cost of Service

TGVIGas

Portfolio

TGVI StorageFacility$20.8 M

TGVISystem

Capacity

Bas

ed o

n to

0.

5 bc

f50

mm

cfd

TGIMidstream B

ased

on

1.

0 bc

f10

0 m

mcf

d

$12.6 M

$1.9 M

$6.3 M

Annual Cost of ServiceYear 2015

Allocation to gas portfolios based on alternative peaking resource

Allocation to system capacity compares to P&C Alternative

Annual Revenue requirement based on Cost of Service

78

TGVI Portfolio Comparison Annual Cost

0

5

10

15

20

25

2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

$ M

illio

ns

LNG Portfolio

Pipe & CompressionPortfolio

Baseline ScenarioPipe & Compression vs LNG Portfolio

79

TGVI Portfolio Comparison

P&C Portfolio

LNG Portfolio

P&C Portfolio

LNG Portfolio

115 21 72 15

230 163

(68) (48)

(135) (97)

115 49 72 33

15-Year Evaluation Period

48 14 36 11

148 117

(45) (36)

(90) (72)

48 27 36 21

6.20% 10%

TGVI System Costs

TGVI LNG Costs

($ Millions) 25-Year Evaluation Period

TGVI Gas Supply Benefit

Storage Revenues from TGI

Storage Revenues from TGI

Net Portfolio Cost

Net Portfolio Cost

TGVI System Costs

TGVI LNG Costs

TGVI Gas Supply Benefit

Baseline Scenario

80

Sensitivity Analysis

Scenario Assumptions

Baseline Scenario • LNG and TGVI System costs based on P50 Capital Costs and TGVI Baseline Demand scenario (no firm service to ICP)

• Gas Supply Benefits based on JPS + discounted TF1• TGI Revenues based on Storage & Delivery Agreement

Base + ICPScenario

• LNG and TGVI System costs based on TGVI Base + ICP Demand scenario which includes firm service to ICP

• All other assumptions same as Baseline Scenario

Low Core DemandScenario

• LNG TGVI System Costs based on low core demand forecast and no firm service to ICP


High Cost Scenario • LNG and TGVI System costs based on P90 Cost Estimates and TGVI Baseline Demand


Upside Case • LNG and TGVI System Costs based on P10 Cost Estimates and TGVI + ICP Demand Scenario

• Gas Supply Benefits based on avoided WEI Costs • TGI revenues the same as Baseline Scenario

81

Net Portfolio Cost Comparison

$0

$20

$40

$60

$80

$100

$120

$140

$160

$ M

illio

ns


LNG Portfolio

25 Year 15 Year 15 Year25 Year

Baseline Scenario High Cost Scenario

115

49 48

27

135

74

57

43

82

0

20

40

60

80

100

120

140

160

180

Baseline Scenario Base + ICPDemand Scenario

Low Core DemandScenario

High CostScenario

Upside Scenario

$ M

illio

ns


LNG Portfolio

66

69

32

6187

Net LNGBenefit

Net LNGBenefit Net LNG

Benefit Net LNGBenefit

Net LNGBenefit

Present Value @ 6.2%, 25 Year Evaluation Period

Sensitivity Analysis

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Levelized Allocated Average Delivery Cost ImpactBaseline Scenario - Core Market

7.2

7.3

7.4

7.5

7.6

7.7

7.8

7.9

8.0

8.1

$ / G

J

15 Year Evaluation Period 25 Year Evaluation Period

Pipe & Compression

LNG

84

Allocated Average Delivery Costs Comparison

LNG LNG Pipe & LNG LNG Pipe & Approach 1 Approach 2 Compression Approach 1 Approach 2 Compression

Core Market 7.65 7.52 7.75 7.77 7.63 8.02

Firm Transport 0.96 1.14 1.17 0.94 1.13 1.17

Core Market 7.35 7.08 7.56 7.32

Firm Transport 0.83 1.07 0.85 1.08

Impact of Firm Service to ICP to 2018

Levelized Allocated Cost 2011 - 2032

($/GJ)

Baseline Scenario

Levelized Allocated Cost 2011 - 2022

($/GJ)

Comparison of Levelized Allocated Average Delivery Costs Excluding Gas Costs

85

Regulatory Process ReviewTom Loski

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Request for approval from BC Utilities Commission

• Certificate of Public Convenience and Necessity – Pursuant to Section 45 of the Utilities Commission Act – TGVI

• Storage Services Agreement– Pursuant to Section 61 of Act – TGVI– Pursuant to Section 71 of Act – TGI

• Fair return on Equity• Adjusted Depreciation Schedule

– Pursuant to Section 56 of Act – TGVI

• Development cost recovery• Written hearing process

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Regulatory Process Steps Completed

1. Application Submitted to BCUC Tuesday, June 5

2. BCUC Procedural Order No. G-63-07 Friday, June 8

3. Public Notice Friday, June 15

4. Intervenor Comments on Procedure Monday, June 25

5. Workshop Wednesday, June 27

88


Questions?

TGVI MT. HAYES LNG STORAGE FACILITY WORKSHOP

Held in Nanaimo on June 27, 2007

At the Coast Bastion Inn

Terasen Presenters and Attendees

• Stan Ballance

• David Bodnar

• Cynthia Des Brisay

• Bruce Falstead

• Carol Greaves

• Chris Hyland

• Rose Jacques

• Edmond Leung

• Tom Loski

• Don Wallace

• Guy Wassick

Mt. Hayes Liquefied Natural Gas Storage Facility Terasen ... · PDF fileLiquefied Natural Gas...

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