Statement received from Westcoast Gas Services Inc, April 1999

Introduction

Westcoast Gas Services Inc. is proposing to develop a liquefied natural gas storage facility in the McNab Creek valley of the Sunshine Coast. The facility will take surplus natural gas available in summer months and store it for use when gas demand increases on cold winter days. The gas will be drawn from the existing Centra Vancouver Island pipeline and returned to the pipeline. There will be no other transport of LNG or natural gas to or from the plant. The natural gas is stored as a liquid at atmospheric pressure in a specially designed refrigerated tank.

A summary of the project is available on the Westcoast Energy web page:
(www.westcoastenergy/company/initiatives/mcnab_lng.html#1)

Our complete environmental assessment and all correspondence with the BC Environmental Assessment Office is posted on their web page:
(www.eao.gov.bc.ca/project/energy/wgsi/home.html)

Regional Benefits

The proposed McNab LNG Storage project will provide significant benefits to the Sunshine Coast Regional District both when the facility is in operation and during construction.

When the project is operational, it will provide tax revenues and jobs. The $130 million investment will add to the tax base of the SCRD. Annual property taxes are estimated to be $840,000 of which $250,000 would be payable directly to the region. Total tax revenue generated by the project for all levels of government are estimated to be more than $6 million per year.

The facility will provide employment opportunities for operating and maintenance and WGSI has made a commitment to source these services locally. The storage project will have twelve full time highly skilled, well paid operating staff positions. It is expected that these employees will live in on the Sunshine Coast. In addition there will be further employment opportunities for maintenance of the facility. Westcoast Gas Services Inc. will contract for maintenance services for the facility.

The annual maintenance budget is estimated to be $1,000,000. Local contractors will be utilized to carry out that maintenance where they have the required qualifications. Since many of the maintenance operations require expertise similar to those required by the pulp mill it is expected that the large majority of that work will be carried out by local people.

During the course of construction there will be many opportunities for local businesses and people to provide services to the facility. WGSI has committed to maximize the employment and business opportunities for residents of the SCRD. WGSI has guaranteed to obtain 5% of the value of the project from local businesses and residents.

Construction of the facility will provide about 200 person years of direct employment. At the peak of construction 125 people will be working on the project. WGSI anticipates that these people will be living in on the coast and thus will be making a significant contribution to the economy through their purchases of goods, services and accommodation. Because of our commitment to hire local people preferentially WGSI expects a large number of the construction workers will be permanent residents of the Sunshine Coast.

An added benefit of the LNG plant to the Sunshine Coast is the additional security of supply for natural gas consumers. Should the supply of gas be cut off because of a pipeline failure or other service interruption, upstream of McNab Creek, the LNG would be able to maintain deliveries of gas to the Sunshine Coast and Vancouver Island. At full capacity the plant could maintain deliveries for at least a month.

In conclusion the McNab LNG will provide significant benefits to the Sunshine Coast through permanent and construction job opportunities, contract services, additional tax revenues and added security of gas supply.

Risks and Environmental Effects

The McNab LNG will be developed and operated in a safe and environmentally benign manner. Multiple studies of the proposal have confirmed there are no significant risks or environmental impacts created by the project. This has been confirmed by the British Columbia Environmental Assessment Office through its comprehensive review of the project proposal.

The project will be developed on a 24 ha property 7.5 km inland from Howe Sound. The valley is an active logging area. Logging has been carried out in the valley for over 100 years. The proposed site is in a second growth fir plantation with trees up to 25 years old.

WGSI has completed a thorough and rigorous assessment of the environmental effects of the project. All aspects of the potential effects of the project have been identified and assessed. These included effects on birds, terrestrial and aquatic wildlife, and their habitats. Effects on air and water quality were evaluated. Noise, visual aesthetics, and socio-economic effects were also considered.

The conclusion from these comprehensive assessments is that the development of the project will have no significant impact. Further, to ensure that WGSI meets its objective of minimizing any impact of the project it has committed to developing and implementing a comprehensive environmental management plan. The plan will be developed in cooperation with Federal, Provincial, regional and First Nations people.

The modern LNG industry has an excellent safety record. There are more than 250 LNG facilities around the world, 115 in North America. Since the second world war no member of the public has been injured or killed as a result of any incident at an LNG facility . There is an LNG storage tank and peak shaving facility on Tilbury Island in the Fraser River in Delta, B.C. which has been in operation for thirty years.

There was a major LNG incident in Cleveland, Ohio in 1944 that resulted in 130 deaths. An LNG tank failed because the metallurgy used for the tank was not suitable for the low temperatures. As well, the plant did not have many of the safety features now standard in the industry. In part because of the Cleveland incident, the design and operation of LNG facilities was changed to prevent similar incidents from recurring. The impeccable safety record since that incident shows that the LNG industry has achieved that objective.

Japan is one of the largest users of LNG and has many storage tanks. Japan is also one of the more seismically active areas of the world. None of the LNG tanks in the Kobe area were damaged as a result of the magnitude 6.9 earthquake that occurred in 1995.

In developing its LNG proposal Westcoast Gas Services Inc. has employed consultants with world class LNG expertise. The risks associated with the facility have been identified and evaluated. The WGSI studies concluded that the proposed LNG facility imposes no risk to any population area, the closest of which is the McNab Creek recreational development 7.5 km from the project site. The Sunshine Coast Regional District has contracted an independent consultant (Trinity Consulting of Itasca, Michigan) to review the WGSI project. They confirmed the validity of WGSI's risk evaluations.

Earthquake resistance is a fundamental consideration in designing the LNG facility. WGSI's geotechnical consultant has assessed the potential magnitude of earthquakes in consultation with the Pacific Geoscience Centre. The McNab Creek area is subject to the same level of earthquake risk as the general Lower Mainland area. There is no evidence of local faulting that would indicate earthquakes may occur in close proximity to the facility.

The project will be designed to withstand the worst credible earthquake that could occur in the area. The probability of such a quake occurring is less than once in 10,000 years. This is the same level of seismic resistance that is being used for the seismic upgrading of the Seymour River dam in North Vancouver.

There is the possibility that some time in the future southwest British Columbia may be struck by "the big one" originating from the Juan de Fuca plate west of Vancouver Island. The LNG facility will be able to with stand a magnitude 8.5 earthquake occurring on the Juan de Fuca plate. WGSI believes that the level of seismic resistance that the LNG tank will be built to is the highest of any structure in British Columbia.

There has been considerable public discussion of the potential for the facility to produce a vapor cloud that could put the public at risk. This event was considered in our risk analysis and as indicated above there is no significant public risk from this type of event. A limited vapor cloud could occur if the LNG storage tank were to suddenly collapse and release the liquefied gas. WGSI has looked at the possibility of a tank failure occurring. Such a failure is considered to be "non-credible". The tank will not leak when subjected to the largest foreseeable earthquake. There is no credible event that could lead to a major tank failure.

However to address the public's concern WGSI has evaluated the potential effects of such an improbable tank failure. If the tank failed the LNG would spill out of the tank but be contained by the dike that surrounds the tank. The LNG would be warmed by the ground and air and begin to form a natural gas cloud. The natural gas cloud will warm up and disperse into the upper atmosphere. However initially the natural gas would be heavier than air and would tend to flow close to the ground. The distance that the gas would travel before dispersing will depend on the rate of liquid release, air and ground temperatures, wind speed and atmospheric stability conditions.

WGSI has evaluated a broad range of release conditions and determined those that could create the greatest travel distance of the natural gas cloud. This "worst case" event assumes that the tank completely releases its contents in 10 seconds. The maximum distance that the gas could travel in this improbable worst case event from the plant to the point the natural gas is at half the concentration required for it to burn, is 4 km. Under any other circumstances the travel distance would be shorter.

While the gas is dispersing it presents a fire hazard but there is no risk of an explosion. Natural gas released in an open or unconfined space cannot explode: it can burn but not explode.

Conclusion

WGSI believes the LNG project is a good project for the Sunshine Coast Regional District. The project will help diversify the area's largely resource dependent economy and provides significant job and tax benefits to the community. The facility is clean, producing no effluent. Emissions to the air are only exhaust gases from natural gas fueled equipment. There are no significant safety risks and no significant environmental impacts.