Moving Mountains Is Coast Gaslink Pipeline Savior Or Scourge

For Carlos Pardo, construction manager on the hardest part of the $11.2 billion, 670-kilometre Coast GasLink pipeline that will connect the gas fields of eastern B.C. along the Pacific coast, it’s a rare sunny day. “I don’t often get a chance to really see what we’re up against,” he mutters as he scans the rinks overhead. “It really doesn’t get more extreme than that.” Pardo is under huge pressure to get the pipeline – now more than two-thirds complete – through the mountains to a $40 billion liquefied natural gas (LNG) plant under construction in the coastal city of Kitimat. The project has taken on a heightened sense of urgency since Russia’s invasion of Ukraine last February led to a severe cut in natural gas leaving Russia—and a 116 percent increase in prices over the past year. But getting the pipeline — which is assembled from 10-ton sections and 60 feet of 4-foot-wide pipe — through these mountains is an almost superhuman challenge. “In some places here, the pipeline moves up almost vertically,” explains Pardo. Its section includes 22 mountain slopes that justify alpine classifications. “On one run, it’s a 1.4km black level ski run with 700m of elevation gain,” he adds. “We had to build a cable crane and gondola system to bring the workers and pipe pieces to the larger stretch. This is an epic project.” Pardo started out in the pipeline business in Colombia, where the challenge of laying pipes through the Andes was compounded by fears of an attack by armed rebels. Fortunately, here in these mountains, violence—aside from the ever-present threat of a bear attack—isn’t an issue. But the pipeline that Pardo and his team are struggling to build has inspired violence at other stops along the way. Environmental activists strongly oppose the project both because it would eventually transport five billion cubic feet of natural gas each day at a time when the world’s scientists agree we must stop burning fossil fuels, but also because of the potential destruction of an otherwise pristine region . Carlos Pardo (left), the man in charge of Section 8 of the pipeline, and Kent Wilfur, the TC Energy executive in charge of the project. In Houston, BC, millions of dollars worth of equipment was destroyed last February, and at times large numbers of police have turned on protesters at blockades along the pipeline’s route, such as in Wet’suwet’en, where hereditary chiefs oppose the project even though elected community leaders have joined 19 other First Nations in signing agreements with the pipeline’s developer and a minority, TC Energy. Despite high prices and the fact that almost everyone these days is desperate to get access to Canada’s abundant natural gas, the CGL project faces prohibitive financial hurdles. Riding in the back seat of the Pardo truck, Kent Wilfur—TC Energy’s vice president of project delivery for the CGL pipeline—describes the ongoing boom in Canadian pipeline construction with a mixture of surprise and caution. In 31 years in the industry, Wilfur says, “I’ve never seen it as busy as this.” As the company moves into northern BC, Wilfur says, TC Energy is also implementing what it describes as a $10-billion upgrade to the Nova gas transmission line in northeastern BC and Alberta, which connects to the main line through the central Canada and the United States (where the Keystone XL project was recently scrapped). Meanwhile, twinning of the federal TMX pipeline between Alberta and the Pacific Coast is also underway at an estimated cost of $21 billion. From Wilfur’s position as the TC Energy executive in charge of CGL construction, what all this pipeline fever means is an alarming shortage of labor and equipment (combined with pandemic-related shutdowns) leading to skyrocketing costs for almost, almost everything. . Ask him about the price of building this high-mountain pass called Icy Pass—where crews from a nearby base camp race under Pardo’s supervision to get the treacherous routes in place before winter hits—and you’ll get a quiet chuckle. . “Let’s just say it’s very expensive,” he admits. A more accurate recognition of just how expensive came in late July, when TC Energy revised its initial estimate of $6.6 billion upwards to $11.2 billion. But he gave no indication of where all that new money would come from. Neither did its partners, New York-based investment giant KKR, the Korea National Pension Service and AIMCo, the entity that manages Alberta’s public pension funds, which collectively bought 65% of the project in 2019. Work on the pipeline has taken on a heightened sense of urgency since Russia’s invasion of Ukraine last February led to a severe cut in natural gas leaving Russia—and a 116% increase in prices over the past year. Suffice to say, Wilfur and his team face enormous challenges as they approach Kitimat. Ultimately, the consortium hopes to ship all that LNG to thirsty nations in Asia and beyond — which, the company insists somewhat unprofitably, could help reduce overall global greenhouse gas emissions, not increase them. With global energy consumption growing insatiably, says TC Energy CEO Francois Poirier, “it’s our responsibility to transition to lower emissions.” And Canadian natural gas, he adds, is among the cleanest in the world, making LNG “the fuel of choice” for nations looking to move away from coal and oil. “We have always believed that the long-term outlook for LNG is very good and North America is incredibly well positioned to meet global demand.” Whether you agree with that argument or not, the CGL pipeline, along with the Kitimat LNG plant, represent the biggest gamble of Canadian infrastructure investment since the construction of the St. Lawrence Seaway in the 1950s and transcontinental railroads in the 1880s. Overcoming all the obstacles—political, social, environmental—has become a juggling act for all involved. But for Carlos Pardo, the focus today is making the most of some glorious June weather that allows for snowmaking and rock blasting at Icy Pass. While the sun is still shining, he aims to make significant progress. “Winter will be back soon enough,” Pardo thinks with a worried glance up where the giant excavators on the snowy mountainsides look like ants moving at a glacial pace. “Actually, it’s winter all year round in a lot of places up there.” The CGL pipeline, along with the Kitimat LNG plant, is the biggest Canadian infrastructure investment gamble of the century. In line with the spectacular engineering ambitions on display at Icy Pass, 50 kilometers west under the CGL pipeline corridor, the largest private investment in Canadian history is transforming the small coastal town of Kitimat, population 8,000. In the city’s harbor, a huge concrete dome the size of a sports stadium takes shape under a forest of cranes and scaffolding. The facility sits between the coastal mountains and the ocean, and next to an aluminum plant that turned this aboriginal fishing village into an industrial boom in the 1950s. About 5,000 workers are involved in building what will be Canada’s first LNG plant. When the facility is complete, gas transported through the CGL pipeline from the extensive natural gas fields of eastern B.C. it will be cooled to -162°C and liquefied—reducing its volume 600 times—for export to Asia on specialized ships. Financed by LNG Canada, a consortium of Shell, Petronas, Mitsubishi, PetroChina and Korea Gas, the plant is expected to begin shipping LNG westward by 2025 or 2026. LNG Canada is proud that the Kitimat plant will put Canada on the global map of LNG exporting countries. And while environmentalists argue that the timing couldn’t be worse for Canada to step up another major source of global greenhouse gas emissions (albeit one with CO2 emissions roughly half that of coal), from purely commercial at least perspective, this Herculean engineering and investment effort seems sincere. Whether viewed through a long-term or short-term historical lens, massive infrastructure investments like this are the kind of bets bankers have always favored in Canada—right down to building the railways through those same mountains. The numbers behind Canada’s LNG infrastructure play are a banker’s delight. Over the past decade, according to the International Energy Agency (IEA), natural gas accounted for almost a third of the increase in total global energy demand. And the IEA predicts that this increase will continue. Short-term trends for natural gas are even more bullish. “Russia’s invasion of Ukraine has exacerbated the gas supply tightening that has been underway since mid-2021, further pushing up prices for consumers,” the IEA said, forecasting European purchases of Russian gas to fall by more than 55% from 2021 levels by 2025. . Exposed pipe on top of Cable Crane Hill along Section 8 of the Coastal Gas Link Pipeline. Forecasters at the Canadian Energy Regulatory Authority (CER) predict that BC will surpass Alberta in natural gas production by 2028. North America, the IEA says, is expected to play a big role in replacing Russian exports to Europe (where, by the way, natural gas was recently reclassified in the medium term as…