BC Business
Woodfibre | BCBusinessWoodfibre was once a thriving community built around a pulp mill, as seen in this 1954 photo.
An Asian petrochemical giant is vying to revive a ghost town that sits across Howe Sound from Squamish. Singapore-based Pacific Oil and Gas is proposing to turn the former Woodfibre pulp mill into a liquefied natural (LNG) gas processing and shipment facility.
Sixty years ago, Woodfibre was a lively town built around its namesake pulp mill on the western shore of Howe Sound. It boasted two churches, a school, swimming pool, bowling alley and movie theatre for the mill’s 750 workers and their families. By 1973, the town was no more; the houses were demolished and the mill’s workers moved to nearby Squamish or Britannia Beach. And in 2006, the mill itself closed its doors.
For the last seven years, the town has pondered proposals to revive the mill site as a waste-processing facility, a naval research facility and a bioenergy production plant, among other ideas.
As an LNG port, Woodfibre would have several critical advantages. The steep granite cliffs encircling Howe Sound plunge to form a natural deep-water harbour some 300 metres deep at the Woodfibre site. Fortis B.C. already has gas pipelines running past the old mill, and the company has applied to upgrade its infrastructure to deliver gas to be processed for export.
The Woodfibre LNG facility proposed by Pacific Oil and Gas would be a relatively small-scale operation, shipping around 2.1 million tonnes of LNG a year. That’s about a tenth of the volume of some of the bigger proposals under consideration for northern coastal towns such as Kitimat and Prince Rupert.
Woodfibre is just one of many B.C. resource towns that have prospered and withered with the fickle fortunes of the resource industries that for generations have been the backbone of the B.C. economy. Now the province is racing to hitch its dreams to a bright new star to become a global powerhouse in liquefied natural gas exports.
The treasure trove it is trying to unlock is the Montney Formation, a deposit on the B.C.-Alberta border that the National Energy Board in November estimated contains 12.3 trillion cubic metres of natural gas. If those reserves are proven, the Montney would by itself have more gas than the national reserves of all but the top four best-endowed countries: Iran, Qatar, Russia and Turkmenistan.
The province and some of the world’s largest energy companies are planning to condense that gas into liquefied natural gas to ship to key markets in Asia where, producers and politicos hope, it can be sold at a premium given the scale of potential demand.
Squamish is just one coastal town reaching for a piece of the action. At least 10 other LNG projects have been proposed, mostly on B.C.’s north coast near Kitimat and Prince Rupert.
With the natural geographic advantages amenable to a deep sea port, existing infrastructure in place and an ample supply of B.C. gas, the key remaining question for Pacific Oil and Gas, whose executives flew Christy Clark for a tour of Chinese LNG ports in November, will be getting through the regulatory process. “Can we get the resources to market in a cost-competitive manner?” asks PO&G president Ratnesh Bedi. “The industry, the regulators, the political leadership and the stakeholders all have to sit down together and find a cost-competitive solution.”
To Bedi, uncertainty and risk add costs. “Contractors will keep padding their costs if they think there is a risk. How do we keep capital costs of construction low? And after that, how do we keep our operating costs low?” Those costs need to be quantified before moving forward.
“Then we go out to the market and say, ‘What is the market price today, how do we capture our profits and how do we sustain our profits?’” Bedi continues.
If the plant goes ahead, Bedi says Woodfibre LNG will begin shipping fuel sometime between 2017 and 2021, and operate for 25 years. When operational, it will provide 100 full-time jobs.
LNG may indeed transform B.C., but as that last figure indicates, it’s not going to turn Squamish into Fort McMurray. The Woodfibre mill, at its peak, supported a whole town. Today, more people in Squamish—some 7,600—are employed in tourism than in any other industry. Gas, forestry and mining will undoubtedly remain a big part of the Squamish economy for years to come, but the days when one big industry dominates people’s lives are over. That ship has already sailed.