“Hope is like the sun, which, as we journey toward it, casts the shadow of our burden behind us.”
Samuel Smiles
There is an enormous supply of natural gas in Northeast B.C.: an estimated 3,400 trillion cubic feet. This is enough natural gas to support the energy needs of Canada, and many other nations, for more than 150 years. BC is working to create a new industry to generate, process and ship liquefied natural gas (LNG) to the world’s markets. If it becomes operational the LNG industry will add hundreds of billions of dollars, and tens of thousands of jobs, to the BC and Canadian economies. That’s the good news. The other news is that LNG in BC is one of the most controversial topics to emerge over the past decade, and there are many and various challenges associated with, and sources of opposition to, the whole idea.
In other words: BC’s LNG industry is a pretty big deal but it doesn’t exist yet and, more importantly, may never become a reality.
Since 2013, as a founding partner and senior consultant with Berlineaton, I have had the privilege of being part of BC’s move into the LNG sector and been invited to support leaders in industry and government engage widely to help prepare for the many benefits and challenges we face as this potential, enormous opportunity takes shape. Berlineaton’s main contribution to this effort has been to provide facilitation and other support to various individuals and teams as they consult with each other in sessions - both large and small – in ongoing efforts to shape BC’s LNG future. These consultations have been wide ranging in terms of the topics, spanning a variety of economic, political, environmental, First Nations and workforce development issues. These discussions have been passionate, respectful, future focused and genuine in seeking potential benefits for BC and Canada. As a facilitator and third party ‘professional onlooker,’ I have been in a unique position to witness and enable these discussions.
Here are five surprising things I’ve learned while working in the LNG space in BC over the past three years:
1. What seemed complex is actually mega complex
LNG in BC is far more complex than I had initially thought. At first glance, the technical considerations look relatively straightforward: extract the gas from the fields in northeast BC, pipeline it to a processing plant near the coast, condense the gas, load ships with LNG and off you go. We already do this for similar commodities, like oil, so how hard can that be?
Really hard as it turns out.
For a start, there’s the science stuff. LNG is natural gas that has been chilled to -160°C. Once chilled, the gas becomes a liquid, condensing to 1/600th of its original volume. In this form, it is much safer and more efficient to transport. Extracting the gas from the fields in the northeast isn’t much of a problem. We already do that. It gets more complicated when you transport the gas to the coast by pipeline then super cool, condense and load it onto specially designed billion dollar cryogenic ships that look like they sailed out of a maritime version of Star Wars. Add the technical challenges related to installing extensive industrial infrastructure in a remote and sparsely developed region of BC, to the environmental and land use considerations associated with First Nations and other stakeholders and it’s easy to understand why, if LNG had a Facebook page, its relationship status would be “it’s complicated”.
2. The world already knows a lot about how to run an LNG industry
When I first became involved in the LNG space I was under the naïve impression that it was a fairly new thing. As it turns out, LNG facilities have been successfully operating for decades on every continent, except Antarctica. We can draw on practices and tools proven through decades of experience in some of the harshest conditions. Government, industry and others are paying attention to lessons learned from previous LNG implementation initiatives in other places, and are planning to capitalize on learnings emerging from these experiences. It remains to be seen how well we incorporate all that experience into the BC reality but, at first glance, things look ‘not terrible’.
3. LNG seems pretty safe, at least compared to oil
The Exxon Valdez is a good example of the bad things that happen when you punch a hole in an oil tanker on an ecologically sensitive coastline. Of course, being a neophyte, I mentally put LNG in the same boat (forgive the pun) as oil. As it turns out, from what I understand, LNG is pretty benign in comparison. So it’s probably misleading to try to compare one with the other in terms of possible adverse environmental impacts. Having had an opportunity to listen to experienced maritime piloting professionals also helped to convince me that a serious safety issue occurring as a result of LNG shipping on our coastline is highly unlikely. I found this fairly comforting for obvious reasons, one of which is purely selfish: my family and I live on the west coast.
4. The upside seems unlimited
How many hip replacements could you pay for using the royalties generated from a trillion dollars or so worth of LNG activity? Enough said.
5. Don’t count your chickens
I don’t know what I was thinking when I first entered the LNG arena, but it seemed to me that we were just about ready to flick the switch to the ‘on’ position. This impression was reinforced by various announcements in the media proclaiming the achievement of various developmental milestones. What I actually discovered was that, although there are agreements in principle between many of the major players involved, we still have a lot of work to do to get things right before a final investment decision, or FID, is made. These things include a host of strategic and operational details; and the devil is always in the details. Ongoing environmental assessments, building meaningful business relationships with communities and First Nations, and securing skilled workers while developing a large scale infrastructure within an environment that could be described as generally ‘Anti-LNG’: all these things could contribute to a perfect storm for a mega-project like this.
So, despite the many positive aspects of the BC LNG dream, over these past three years, I’ve also learned that LNG in BC could still wind up being a mega flash in the pan.
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Richard Eaton is a co-founder of Berlineaton a management consulting firm that specializes in continuous improvement, strategy & execution, and leader development. If you are interested in finding out how your organization can improve its effectiveness through continuous improvement, please contact Richard at 250 472-3767, email reaton@berlineaton.com or visit www.berlineaton.com/practice-areas/continuous-improvement
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