Wind could power cleaner BC LNG, says company in deal with offshore wind giant DONG

Image: DONG Energy

One of the biggest criticisms of proposed liquefied natural gas (LNG) plants on the B.C. coast is the carbon pollution they would create. The emissions from just two of the most advanced LNG export projects and the associated tight gas drilling operations would pose a serious challenge to Canada and B.C. making good on their climate commitments, says the Pembina Institute. Three projects would put B.C. targets out of reach.

Now a Vancouver-based company sitting on a wind resource that could make B.C. the Saudi Arabia of offshore wind power says its proposed project off the coast of Haida Gwaii could help significantly lower the carbon profile of those LNG projects.

NaiKun Wind Energy Group has just signed a deal with Denmark-based DONG Energy, the world’s largest developer of offshore wind, to advance what would be Canada’s first offshore wind farm.

NaiKun said it is working collaboratively with LNG proponents to find sustainable ways to mitigate their environmental impacts, though any sale of power would go through Crown-owned BC Hydro, with which NaiKun has yet to come to terms for a power purchase agreement.

“LNG has to be powered with more electricity so that it doesn’t create more greenhouse gases,” Michael O’Connor, NaiKun president and chief executive officer, said in an interview.

He cited carbon tax costs alone that could amount to hundreds of millions of dollars a year for LNG proponents. “Today electricity is as good or better a solution [compared to natural gas], and that means that electricity could come from a source like ours.”

The project’s first 400-megawatt phase, which would involve the installation of about 40 turbines, already has the Environmental Assessment Certificates from the provincial and federal governments. With final approvals, which would be at least a year off, it would take another three years to build and commission the project, well within the time frame of any LNG projects, O’Connor said. Subsequent phases could take the project to 2,000 or more megawatts as demand grows, he said.

The clean energy it produces would feed both the BC Hydro grid via Prince Rupert to the east and Haida Gwaii to the west, the largest part of the province not on the grid which is currently reliant on costly diesel-produced power, said O’Connor.

In DONG, a former state-owned oil and gas producer that owns and operates 22 offshore wind farms in Europe, NaiKun has a credible backer, he said. The partnership ensures that NaiKun has access to DONG Energy’s leading-edge technical expertise and dedicated financial resources, and establishes a framework for a long-term relationship.

“Offshore wind is a reliable home-grown energy source and we are excited to explore the Canadian market,” Thomas Brostrøm, president for Boston-based DONG Energy Wind Power North America, said in a statement. “We see this opportunity as a first step to bringing offshore wind power to Canada in what could become a strategic partnership with the nation’s front-runner project.”

World-class wind resource

NaiKun’s 550-square-kilometre permit area is about five kilometres at its closest to the remote northeast coast of Haida Gwaii, an area that harbours some of the strongest, most consistent winds in the world. Its shallow water, just 12-15 metre deep, enables the project to use bottom-fixed structures, which would be positioned a minimum of eight kilometres offshore, southeast of Rose Spit.

Hecate Strait is ideally situated for wind generation, O’Connor explained. “The winds come off of the Pacific [Ocean] and hit the Coast Mountains and turn north. And so we have a southeast wind that comes roaring up the coast and funnels toward the north end of Hecate Strait, causing the winds to increase in velocity. It’s a huge wind resource that rivals anything else in the world.”

With power production 97 per cent of the time, a gross capacity factor of greater than 60 per cent, and with more than 19 years of wind data showing 10 metres per second average wind speed, the project is poised to be cost-effective and reliable, according to NaiKun. Fully developed in subsequent phases, the wind resource in the permit area alone could provide in excess of two gigawatts of power, the company estimates.

Falling costs

The cost of offshore wind has dropped dramatically over the past decade as the technology has improved and the sector has learned from experience with rapid growth, primarily in Europe. It now undercuts conventional forms of power such as coal and nuclear without subsidy in favourable areas.

Originally estimated at more than $2 billion a decade ago, the NaiKun project would come in much cheaper today, O’Connor said. Initial estimates were based on the use of 3.6-megawatt turbines. Today’s larger, more efficient turbines are approaching 10 to 12 megawatts.

“That means one-third the number of turbines, foundations and cables will be needed. Their operating characteristics are also much better—there is no gearbox anymore, for example—and so the price to develop offshore wind is about a third what it was [a decade ago]. It’s a very cost effective project to build now.”

O’Connor, a former president and CEO of BC Transit and project director for Vancouver’s $1.7-billion Canada Line rapid transit project built in the lead up to the 2010 Winter Olympics, has delivered complex projects before. He notes the proposed LNG projects would dwarf the Canada Line, providing an ongoing major boost to the economy.

“These [LNG] plants are upwards of $20 billion—that’s 10 Canada Lines, and they would build the equivalent of one Canada Line a year in developing the gas fields in Alberta and B.C., every year for the life of the plant. The benefits for B.C. and Alberta and Canada are just truly staggering.”

O’Connor said the company has been working collaboratively with North Coast communities and First Nations and does not foresee major opposition arising from the proposal. “When we did our environmental assessment, the Haida Nation actually undertook their own environmental review of the project and were satisfied with it,” he noted.

The timing is ripe as well, O’Connor believes, even while a surplus of LNG has led to a slump in prices and the status of BC Hydro’s Site C dam remains uncertain. “I think with the new [NDP] government here that is interested in renewable energy and a federal government that is interested in reducing greenhouse gases with renewable resources, that our time is closer. I’m quite encouraged—I think all the stars are lining up.”