Running out of gas

Trent Ernst, Editor

In November of 2011, Tumbler Ridge nearly ran out of gas.

Literally, there wasn’t enough gas in the system to provide gas to all the customers and so Pacific Northern Gas (PNG) curtailed Quintette Mine’s gas usage. While this didn’t adversely affect Quintette (as the gas was used primarily for heating), it was a sign of things to come.

With Quintette on track to re-open the mine in 2015, they’ve asked PNG to provide a firm gas supply contract for up to 160,000 GJ.

In 2012, Quintette only used about 45,000 GJ.

This puts PNG in a perilous situation. Quintette could switch over to propane, which would be trucked to the mine site. That would mean PNG has enough gas in their current system to provide for the town. Quintette uses about 25% of the total gas produced by the Tumbler Ridge Gas Plant.

While this sounds like it would be a good thing, it is not. Because of the way natural gas is regulated, each area is responsible for the cost of gas in that area.

So if, say, PNG added $1-million in infrastructure to the Fort St John, that cost would be spread out over all the residences of Fort St. John, of which there are 11,210. This would mean the cost increase per dwelling per year would be about $90, far less if we include all the businesses and industry. (Note that these figures are just to illustrate how the system works and not in any way accurate.)

In Tumbler Ridge, the same million dollar increase, spread out across the town’s 1158 dwellings would mean that each household would be paying $863 per year more. And if Quintette isn’t around to pay their portion of that, the cost per dwelling goes up.

Peter Schriber is Manager of Financial Planning and Business Development for PNG. He says there are really only three options for PNG. One is to increase the capacity of the current gas plant. This seems the most logical, says Schriber, but it would trigger an Environmental Assessment that would take many years, and would cost in excess of $5-million.

The second option, says Schriber, would be to tap into an existing sweet gas pipeline. There are a number in the area, but the closest one is 15 km away. Says Schribar, this would cost at least $3-million, and probably more, as this doesn’t factor in the mountainous terrain.

This option would probably be the best long-term option, says Schriber, but Tumbler Ridge is on the cusp right now, and if there is a downturn in the economy, the additional gas might not be needed, which would be an additional burden on existing customers.

Until the demand makes that feasible, says Schriber, the best option is to build a “virtual pipeline” using compressed natural gas. “PNG believes that a compressed natural gas trucking service is the best short- to medium-term option to fill the gap until it is economically viable to build a new pipeline.”

There are additional benefits to a virtual pipeline, says Schriber. “It would allow for flexible delivery to meet growth,” he says. “And, if demand isn’t as high, the mobile equipment could be deployed elsewhere. There would be no disruptive construction, and for now, it would mean one tanker per day along highway 52.”

“While there are some cost impacts from implementing the CNG solution, they would be lower and less risky than both the other supply alternatives or the negative impact on Tumbler Ridge customers that would occur if Quintette switched away from gas.”

Schriber says that this would probably only be a temporary solution. He says PNG has already heard from HD mining, who have requested 500 TJ (terra joules) starting in 2015. If the other mines were to sign on, says Schriber, it would make the other options more feasible.

Over the last few months, says Schriber, they have been running a pilot program, bringing in a truck of compressed natural gas from Dawson and unloading at the Quintette Gate near the mine, which has been quite successful.

Schriber says that PNG is about to file a Certificate of Public Convenience and Necessity with the BC Utilities Commission, seeking approval for capital expenditure of between $2.5 and $3 million to execute the project.