Environmental Assessment Office

Office of the Associate Deputy Minister

Mailing Address: PO Box 9426 Stn Prov Govt Victoria BC V8W 9V1

Location: 2nd Fl – 836 Yates St Victoria BC V8W 1L8

File: 30020-04/PECD 2020 Reference: 367490

December 21, 2020

SENT VIA EMAIL

Chris Dawson Facilities Engineer PETRONAS Energy Canada Ltd. 1600 – 215 2nd Street SW Calgary, AB T2P 1M4 cdawson@petronascanada.com

Dear Chris Dawson:

On November 12, 2020 the Environmental Assessment Office (EAO) received a Project Notification from PETRONAS Energy Canada Ltd. (PETRONAS) for the Town North B-89-J/94-B-16 Gas Plant Expansion.

The EAO invited the public, local governments, provincial and federal government agencies and Indigenous nations to comment on the Project Notification during a 21-day Indigenous and Public Engagement and Public Comment Period, held fromNovember 16 to December 6, 2020. The EAO received three public comments insupport of the expansion and comments from McLeod Lake Indian Band andProphet River First Nation, who indicated they had no concerns with respect to theProject Notification.

After considering PETRONAS’s Project Notification and the Project Notification Report prepared by the EAO which contains the EAO’s summary of the process and conclusions, I have determined that no further review of the Project is required under Section 10(4)(c) of the Environmental Assessment Act (2018).

Information regarding this determination is available on the Project Notification page of the EAO’s website.

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If you have any questions, please contact Fern Stockman, Project Assessment Director, at Fern.Stockman@gov.bc.ca or by telephone at 778 698-9313.

With best regards,

Elenore Arend Chief Executive Assessment Officer and Associate Deputy Minister

cc: Fern Stockman, Project Assessment Director Environmental Assessment Office Fern.Stockman@gov.bc.ca

Jessica Warner, Project Analyst Environmental Assessment Office Jessica.Warner@gov.bc.ca

Nathan Braun, Executive Project Director Environmental Assessment Office Nathan.Braun@gov.bc.ca

EAO’s Project Notification Report

PN-003 TOWN NORTH GAS PLANT EXPANSION DECEMBER 21, 2020

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1.0 OVERVIEW OF THE PROJECT NOTIFICATION REVIEW PROCESS Section 10 of the Environmental Assessment Act (2018) (the Act) requires that proponents submit a notification to the Environmental Assessment Office (EAO) before proceeding with a project, when the project exceeds the notification thresholds set out in the Reviewable Projects Regulation (RPR). A proponent of a project that meets the notification thresholds must not carry out any activities referred to in the notification until they receive a determination that no further review is required or any review of the project that is required has been completed.

Within 60 days of receiving the notification, the Chief Executive Assessment Officer (CEAO) must review a proponent’s Project Notification and do one of the following:

1. Refer the notification to the Minister of Environment and Climate Change Strategy for consideration to designate the project as a reviewable project because of the potential for significant adverse effects;

2. Require further review under Section 10; or 3. Determine that no further review is required.

The purpose of this Project Notification Report (Report) is to document the Project Notification process and its conclusions for the CEAO, to inform the CEAO’s determination under Section 10(4) of the Act.

More information on the Project Notification process is available in the EAO’s Project Notification Policy.

2.0 PROJECT OVERVIEW On November 12, 2020, the Environmental Assessment Office (EAO) received a Project Notification from PETRONAS Energy Canada Ltd. (PETRONAS) for the Town North B-89-J/94-B-16 Gas Plant Expansion (TNGP Expansion). PETRONAS is proposing a modification to its existing Town North Gas Plant (TNGP) that triggers notification under Section 5(3) of the RPR. Section 5(3) of the RPR specifies that a notification is required for the first expansion of a project that emits 125,000 tonnes or more per year of one or more greenhouse gases (GHG), if the project has not already received an environmental assessment certificate. The proposed TNGP Expansion would increase the TNGP’s estimated emissions by 144,616 tonnes of CO2e per year, bringing total emissions to 285,172 tonnes of CO2e per year.

The TNGP Expansion is located in between Wonowon, British Columbia (B.C.) (43.7 kilometres [km] to the southeast) and Pink Mountain, B.C. (20.1 km to the northwest) within the existing 30.52 hectare (ha) Town North Gas Plant (TNGP) fence line (see Figure 1 and 2). The TNGP Expansion would be located within Treaty 8 territory, with the nearest Indigenous nations being the Blueberry River First Nations, Doig River First Nation, Halfway River First Nation, and West Moberly First Nations.

On November 10, 2014 the EAO issued an exemption order under Section 10(1)(b) of the Environmental Assessment Act (2002) (the former Act) to PETRONAS, exempting TNGP from the requirement to obtain an environmental assessment certificate. The exemption was issued because the Executive Director of the EAO determined that TNGP would not result in any significant adverse environmental, economic, social, heritage or health effects. Construction for the TNGP began on September 25, 2018. The existing gas plant includes the following infrastructure within its 30.52 ha fence line:

• Natural gas processing facility; • Power generation; • Storage for produced water, condensate, and natural gas liquids; • Sales gas compression; and • Topsoil storage.

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The TNGP Expansion involves the development of one natural gas processing train within the existing TNGP fence line. The expansion would share some process equipment with the existing plant, including natural gas and liquids separators, amine treatment package, incinerator, measurement and pumping equipment, heat medium systems, hot oil process heaters, fuel gas system, flare system, power generation and utilities. Equipment associated with the expansion includes:

• Refrigeration package; • De-ethanizer tower/reboiler and peripherals; • De-butanizer tower/reboiler and peripherals; • Storage for produced water, condensate and natural gas liquids; and • Sales gas compression.

Construction of the TNGP Expansion would include driving pilings, pouring foundations and installing the gas processing infrastructure listed above. The primary source of additional GHG emissions as a result of the expansion is consumption of fuel gas supply for turbine generators to provide electricity for the facility, which would include powering the natural gas processing.

3.0 PROJECT AUTHORIZATIONS PETRONAS currently holds Facility Permit #9708066 and Facility Permit Extension #18309 for the existing TNGP, issued by the B.C. Oil & Gas Commission (OGC). These permits allow PETRONAS to carry out construction and operation activities pertinent to the project. PETRONAS has applied for a Waste Discharge Permit from the OGC under the Environmental Management Act, to allow PETRONAS to discharge emissions into the air from the TNGP; the application is currently under review. PETRONAS intends to apply to the OGC for a Facility Permit Amendment for the TNGP Expansion in 2022, and a Waste Discharge Permit Amendment for the TNGP Expansion in 2023.

B.C. has legislated GHG reduction targets under the Climate Change Accountability Act, and a suite of legislative, regulatory and policy tools, including the CleanBC Plan, to manage provincial GHG emissions and ensure it will achieve targets. GHG emissions from gas-driven processing plants are subject to the Carbon Tax Act, which currently charges 7.6 cents per cubic metre of natural gas used at the facility. This is equivalent to $40 per tonne of emissions associated to natural gas use. The TNGP Expansion is also subject to the Greenhouse Gas Industrial Reporting and Control Act (GGIRCA) and its Greenhouse Gas Emissions Reporting Regulation, which requires PETRONAS to report their annual GHG emissions to the Ministry of Environment and Climate Change Strategy if they emit above 10,000 tonnes of CO2e per year. GHG emission reports are required to be submitted to the Ministry of Environment and Climate Change Strategy on or before May 31 of the calendar year immediately following the reporting period.

PETRONAS expects construction for the TNGP Expansion to begin in late 2023, with operations beginning in early-mid 2024.

4.0 EAO ENGAGEMENT The EAO invited the public, and the following local governments, provincial and federal government agencies and Indigenous nations to comment on the Project Notification during a 21-day Indigenous and Public Engagement and Comment Period, held from November 16, 2020 to December 6, 2020.

Local Governments:

• Peace River Regional District.

Provincial and Federal Government Agencies:

• Ministry of Environment and Climate Change Strategy;

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• Ministry of Energy, Mines and Low Carbon Innovation; • B.C. Oil and Gas Commission; • Northern Health Authority; and • Environment and Climate Change Canada.

Indigenous Nations:

• Blueberry River First Nations; • Doig River First Nation; • Fort Nelson First Nation; • Halfway River First Nation; • McLeod Lake Indian Band; • Prophet River First Nation; • Saulteau First Nation; and • West Moberly First Nations.

The EAO received three comments from the public expressing support for the proposed TNGP Expansion and received a comment from McLeod Lake Indian Band indicating they did not have any concerns with the proposed TNGP Expansion. These comments are posted to the EAO’s Project Information Centre website. Prophet River First Nation provided comments directly to the EAO indicating they do not have any specific comments regarding the Project Notification.

5.0 TNGP ENGAGEMENT PETRONAS stated that its engagement activities included a notification letter outlining project background, location, facilities, process description, construction duration and notification threshold. On September 8, 2020, PETRONAS provided the letter to the following Indigenous nations:

• Blueberry River First Nations; • Doig River First Nation; • Halfway River First Nation; and • West Moberly First Nations.

On November 6, 2020, PETRONAS notified the following Indigenous nations of the TNGP expansion:

• Saulteau First Nation; and • Prophet River First Nation.

PETRONAS contacted the Peace River Regional district via email, outlining the notification process and providing a project description including location and planned construction timing. PETRONAS has not received any feedback.

6.0 SUMMARY OF POTENTIAL ISSUES PETRONAS noted in their Project Notification that the TNGP Expansion would increase GHG emissions from the TNGP by 144,616 tonnes of CO2e per year, bringing the total GHG emissions from the project to 285,172 tonnes of CO2e per year. While this represents a 0.2 percent1 increase in provincial GHG emissions, the facilities proposed by PETRONAS have been designed to allow for future connection to BC Hydro’s electrical grid by using an on-site cogeneration power plant to

1 The TNGP Expansion’s estimated GHG emission increase represents a 0.2 percent increase in provincial GHG emissions as reported in 2018 by the Climate Action Secretariat: https://www2.gov.bc.ca/gov/content/environment/climate-change/data/provincial-inventory.

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generate the electricity and process heat needed by the gas plant. The use of a cogeneration electrical power plant reduces GHG emissions by 60,636 tonnes of CO2e per year compared to an equivalent gas-driven plant.

The EAO notes that the provincial government has enacted climate action legislation that frames B.C.’s approach to reducing emissions and provides the regulatory and policy tools, including the CleanBC Plan, to manage provincial GHG emissions and ensure it will achieve its reduction targets. While the OGC does not administer regulation specific to GHG emissions, the facility design requirements and operational guidelines (for example, Flaring and Venting Reduction Guideline) effectively manage the unnecessary release of GHG emissions from the regulated facilities. Furthermore, the TNGP Expansion is subject to the Carbon Tax Act, as well as the GGIRCA and the Greenhouse Gas Emissions Reporting Regulation, which requires PETRONAS to report its GHG emissions to the Ministry of Environment and Climate Change Strategy each year and verified by an independent third party. Through these existing permitting and regulatory frameworks, the EAO is confident that the TNGP Expansion’s increased GHG emissions will be effectively managed. The OGC would be the main permitting agency for the TNGP Expansion through both the required facility permit under the Oil and Gas Activities Act and a Waste Discharge Permit under the Environmental Management Act, should PETRONAS’s applications be approved.

The EAO received three comments from the public expressing support for the TNGP Expansion, and one comment from McLeod Lake Indian Band indicating it did not have any concerns or issues with the project. Prophet River First Nation provided comments directly to the EAO and indicated similarly that it did not have any issues or concerns with respect to the Expansion. The EAO did not receive any issues or concerns from local governments, federal agencies or provincial agencies during the public comment period. Based on this and the information noted above, the EAO concludes that the likelihood of the Project Notification causing significant adverse effects, including on Indigenous nations and their interests, is low.

7.0 CONCLUSIONS The EAO has considered that:

• The feedback received on the Project Notification from the public and Indigenous nations during the public comment period did not contain any issues or concerns with respect to the TNGP Expansion;

• The potential effects of the TNGP Expansion, including GHG emissions, would be managed through existing regulatory and permitting requirements; and

• Based on the considerations above, the TNGP Expansion has a low likelihood to cause significant adverse effects, including on Indigenous nations and their interests.

In consideration of the above, the EAO recommends that the CEAO, on consideration of this Report and Section 2 of the Act, make the determination that the TNGP Expansion, as described in the Project Notification, requires no further review as per Section 10(4)(c) of the Act and may proceed to permitting with other agencies.

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8.0 APPENDIX: PROJECT LOCATION FIGURES Figure 1, Regional Location, Town North Gas Expansion

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Figure 2, Project Site, Detailed Location, Town North Gas Expansion