On January 5, 2015, the Province of British Columbia issued a direction (the “Direction”) to the British Columbia Oil and Gas Commission (“OGC”) prohibiting the OGC from issuing permits to convert LNG facility pipelines, which are built to support liquefied natural gas (“LNG”) facilities, into pipelines for transporting oil or diluted bitumen. The Direction prohibits the OGC from permitting project proponents to convert natural gas pipelines supplying LNG facilities to pipelines carrying oil.
While the Province has stated that other pipeline projects may be added to the list in the future, currently “LNG Facility pipeline”, as defined in the Direction, includes the following pipeline projects:
- Pacific Trail Pipelines Project (for Kitimat LNG)
- Coastal GasLink Pipeline Project (for LNG Canada)
- Eagle Mountain-Woodfibre Gas Project (for Woodfibre LNG)
- Pacific Northern Gas Looping Project (for Douglas Channel LNG)
- Prince Rupert Gas Transmission Project (for Pacific Northwest LNG)
- Westcoast Connector Gas Transmission Project (for Prince Rupert LNG)
The Direction is in response to concerns raised by First Nations about long-term pipeline use and in particular the potential adverse effects of transporting oil or diluted bitumen by pipelines, such as spills.
The Direction comes on the heels of TransCanada’s proposed Energy East Project, which will transport oil sands product from Alberta to a marine facility in Quebec and which will involve the conversion of an existing natural gas pipeline to oil. While pipeline conversion is relatively rare in the oil and gas industry, it is clear the BC government intends to prevent any conversion of LNG pipelines within the province.