LNG Terminals Could Face Stricter Carbon Rules

The government of British Columbia is mulling proposals that would require liquified natural gas terminals to have a carbon footprint at least a third lower than global standards, a rule that could require a new tax, Bloomberg News reports.

The current global standard is .25 metric tons of greenhouse gasses per ton of LNG. The provincial government is currently discussing the new rules with energy firms, according to two unnamed sources, Business Insider reports. Any new carbon requirement would be in line with the government’s pledge to make the British Columbia natural gas industry the cleanest in the in world.

According to Cameron Gingrich, director at consultants Ziff Energy, the rule would require a new tax in the province. The new levy would make the industry “less competitive” globally, he told Business Insider.

The province’s existing C$30 ($28) per metric ton of greenhouse gas tax would cost a hypothetical four liquefaction unit LNG plant C$82 million ($75.5 million) a year, according to Ziff.

That tax was instituted in 2008 on all fossil fuels — including gasoline, diesel, natural gas and home heating fuel. It started at C$10 ($9) a metric ton and increased C$5 ($4.60) per ton a year until it hit C$30 ($28) in 2012.

Encana, Canada’s largest natural-gas producer, saved $830,000 in fuel costs, a cost reduction of 47 percent, by switching the power for its shale gas drilling rigs from diesel fuel to LNG, Canada.com reported in 2012.

The savings were based on consumption of almost half a million gallons of fuel and average prices of $3.28 a gallon for diesel and $1.11 a gallon for LNG over a period of about 160 days. The pilot project took place at Encana’s shale gas drilling site in the Haynesville formation on the Texas-Louisiana state line.

Picture credit: LNG terminal via Shutterstock