By R. Bruce Striegler
Gary Paulson, Vice-President Operations and Harbour Master, Prince Rupert Port Authority says, “My responsibilities cover marine operations, port security, emergency preparedness, and environmental sustainability. The single biggest job for my team is to make sure we’re ready from a maritime safety and security perspective for the growth of Prince Rupert Port Authority (PPRA).” He continues, noting that he and his team also actively engage with the Port’s terminal partners supporting their marine operations, safety, security, and emergency planning activities.
The natural gas industry has been a significant economic driver and revenue generator in B.C. for more than half a century. Employing tens of thousands, B.C.’s natural gas sector has grown from $1.8 billion in 2000 to $7.1 billion in 2010. Of the three billion cubic feet per day of gas currently produced in B.C., 16 per cent is consumed within the province, 41 per cent is exported to the U.S. through two pipeline systems, and 43 per cent is delivered to other regions of Canada by pipeline. The game-changer in today’s natural gas world is commercially viable liquefaction, thus enabling gas to be processed and shipped as liquid aboard ships. The critical factor in the global competition to build these plants is market price and competition from newcomers to this industry from countries like Malaysia, Australia and the U.S., each of whom have already advanced infrastructure and plants under construction.
Twelve or more proposed LNG liquefaction plants and terminals are in contention in British Columbia, at least two of the proposals in Prince Rupert, three others in nearby Kitimat. Some of the projects are simply speculative, but others have cleared environmental assessments and obtained export licenses. After months of debate and consultation, in late October, the Government of British Columbia introduced its new Liquefied Natural Gas Income Tax Act. Under the new act, the province would tax an LNG project at a rate of 1.5 per cent when production begins, rising to 3.5 per cent after capital costs are recovered. That rate will rise to 5 per cent after January 1, 2037, when the government expects the LNG industry will be well established within the province.
Despite lowering the rates for the announcement, the B.C. LNG Alliance, an industry group representing six of the more advanced projects, wasn’t convinced the industry can be competitive. The alliance represents LNG consortiums led by Royal Dutch Shell plc, Petronas, Chevron Corp., BG Canada and Woodfibre LNG. Analysts expect Petronas, Malaysia’s state-owned oil company which has proposed an $11-billion Pacific Northwest LNG project near Prince Rupert, to be the first company to decide whether it will proceed with its project.
Port of Prince Rupert prepares for significant traffic increases
In 2012, Prince Rupert Port Authority began implementing recommendations from the Det Norske Veritas (DNV) navigational risk assessment it had commissioned. PRPA requested the firm, one of the world’s leading ship and offshore classification societies, to assume increased traffic projections by 2020 which would include up to 100 LNG carriers and 100 tankers joining the existing traffic mix. Paulson outlines some of the actions that have resulted from the report. “First, we’ve revised our practices and procedures. We call it the Port Information Guide, and it’s based on the International Harbour Masters Association guidelines.”
He explains that with the guide, Prince Rupert has modeled itself on the port of Rotterdam. The 105-page guidebook took a year and a half to assemble, and is a key tool for shipmasters, captains, shipping agents and others. Paulson observes that when attending the International Harbourmasters Association conference in Europe, Port of Rotterdam publicly congratulated Port of Prince Rupert as the first in North America to adopt the practices and procedures. “We get a lot of compliments on the guide, and everybody uses it.”
PRPA’s Gateway 2020 Development Strategy outlines the expansion of more than 400 hectares of industrial land. The plan identifies specific development sites, appropriate terminal uses and ensures conflicts between future terminal activities are mitigated. The Port Authority envisages bulk export terminals on Ridley Island, and prioritizes expansion of the Port’s intermodal activities and services. Construction began in early 2013 on the vision to fully develop Ridley Island with the Road Rail Utility Corridor. This two-lane roadway, with five parallel rail tracks, and a power distribution system creates an eight-kilometre loop around the Ridley Island Industrial Site. When completed early next year, the project will open up development clusters for a range of potential terminals. The project’s two contracting companies, Prince Rupert Constructors and Coast Industrial Construction, both of which are joint ventures between established construction firms and local First Nations, together employs a total of 103 people, more than 80 of whom are from the local workforce.
Anchorage review complete, new positions operational
Prince Rupert harboured 462 deep-sea vessels in 2013, a 16 per cent increase from 2012, and Paulson says, “To get us ready for escalating growth, we’ve completed an anchorage review for the port,” adding that the current average of nearly 500 commercial ship calls per year is projected to rise as high by 1,500 to 2,000, depending upon the number of proposed LNG projects that proceed. “We wanted to ensure our practices and procedures are in-place, that we have sufficient anchorages. Those new anchorages have been established and published. We’re ready to go with new shipping.” He adds that if the traffic is more than envisaged, “we do have the flexibility to establish a few more or a lot more anchorages.” In addition, the port has enhanced navigation aids, putting in tide and current gauges, providing live readings around the clock, seven days a week.
In 2013, PRPA also signed a Memorandum of Understanding with the Canadian Coast Guard that saw the two agencies partner on a project to introduce a new lighted Aid to Navigation in the Prince Rupert Harbour. The fixed sector light at Philips Point in the Fairview Channel enhances the safety of all vessels and mariners entering and exiting the Prince Rupert Harbour, but is particularly useful to B.C. Coast Pilots navigating the deep water channel to the Fairview Container Terminal, Westview Wood Pellet Terminal and inner harbour anchorages.
On the environmental stewardship front, Paulson notes that only a half dozen years ago, the port was a relatively small operation. “We wanted something that would improve our environmental posture as we started this growth cycle, so we looked at the Green Marine program. We were the first port on the West Coast to adopt this program which originated on the Great Lakes, and we’re big fans of the program.” Green Marine is a voluntary environmental certification program for the North American marine industry, managed by a not-for-profit corporation that sets rigorous standards for nine key environmental issues. Participants in the program are American and Canadian ports, terminals, shipowners and shipyards.
Significance of environmental impacts not lost as Prince Rupert prepares to grow
Port of Prince Rupert is such a big fan that in 2013 many of the Port’s partners became Green Marine members, including Maher Terminals, Ridley Terminals Inc., Pinnacle Renewable Energy Group, SMIT Canada, Quickload Logistics, Tidal Transport, Pacific Pilotage Authority, Western Canada Marine Response Corporation, along with two of the proponents of LNG terminals, Pacific NorthWest LNG and BG Group. “As well as the comprehensive environmental assessments that happen with each new port project, on top of that, working with our partners, First Nations, and the community, we’re charting a course where as we grow, Port of Prince Rupert will maintain the pristine nature of the area.”
The DNV navigational risk assessment examined the hazards associated with the potential introduction of 100 crude oil tankers and 100 LNG carriers annually to and from a potential terminal at Ridley Island. The report concluded that the evaluated accident-type with the highest frequency to occur when transiting to or from Ridley Island was grounding. The report also says it is the type of accident most effectively mitigated through the use of escort tugs (for drift grounding) and pilots (for powered grounding).
As part of its growth strategy, PRPA is working with industry partners and regulators to track existing baseline information on air quality in the port’s airshed through real-time monitoring, including greenhouse gases and other air emissions. In 2013, Prince Rupert Port Authority implemented an Environmental Incentive Program for Vessels. It marked the first time shippers using the port could qualify for a reduction in harbour dues based on their ship’s environmental performance. The first six months of the program saw six ships qualify for $20,000 in savings based on their Environmental Ship Index rating.
In 2013, the Westview Industrial Site became the location of Pinnacle Renewable Energy Group’s new wood pellet terminal. The dedicated wood pellet export facility is the first of its kind in Canada. “During the pellet terminal commissioning, there were a lot of dust issues, but we partnered with the terminal operator and formulated a management plan to mitigate those problems.” One of the steps was the installation of the first air quality monitoring station in Prince Rupert which measures particulate matter and collects basic weather information to complement the Port’s existing meteorological station.
PRPA has partnered with LNG proponents Pacific NorthWest LNG and BG Group, establishing a wet deposition station in Port Edward. This site collects rainfall, sampled for concentrations of various ions, like acid rain. This is the third station to be established in British Columbia, with the goal of creating a baseline for the airshed in the Prince Rupert region, prior to development of large-scale LNG terminals on Ridley and Lelu Islands. PRPA’s water sampling program was expanded in 2013 to include more than 20 sites in the harbour, further establishing an existing footprint of current water quality. This baseline will enable tracking of water quality.
To reduce or prevent marine discharge into Prince Rupert Harbour, the Port Authority can board and inspect commercial vessels to review documents including ballast water management reports, sewage plant certificates and make visual inspections of the engine room to ensure discharge pumps are locked and bilge pumps are clean.
Conventional cargoes remain the backbone of the ports’ business
Fairview Container Terminal, the first dedicated intermodal (ship to rail) container terminal in North America, sits on a 24 hectare (59 acre) site. Maher Terminals Holding Corp., the facility’s operator, took delivery in 2013 of a new container handling gantry crane, bringing the port’s total complement of Super-Post Panamax cranes to four. The 1,800-tonne crane is identical to the three that were installed when the terminal opened in 2007. Each crane has a 22-container reach and weighs over 1,800 tonnes.
Although the majority of containerized exports through Prince Rupert represent forestry and agricultural products, shipment of scrap paper, metals and other recyclables accounted for approximately 25 per cent of export containers in 2013. Mineral concentrates, logs, aluminum and dried seafood, all local northwest B.C. exports, are also transported in containers. While minor in volume, they exemplify the export opportunity provided by intermodal supply chains for small volume, high-value or sensitive goods in northern BC.
Although Fairview Container Terminal exports of 536,439 TEUs dropped 5.0 per cent from 2012, forest product container exports increased 14 per cent from 2012, to 68,502 TEUs, and laden container exports rose 21.7 per cent to 151,624 TEUs. More than 90 per cent of the inbound container traffic to the port originates from China and is destined for major North American distribution centres such as Toronto, Montreal, Chicago and Memphis. Apparel, footwear, furniture, electronics and other household goods make up approximately half of the product mix. Automotive components and building materials round out the remainder.
The Ridley Coal Terminal moved a record volume of coal, surpassing its original design capacity of 12 million tonnes and contributing to another record year for total cargo volumes at the port. Despite declining coal markets, terminal rail unloadings decreased by only 2.3 per cent, while ship-loading volumes increased by 0.7 per cent. The Ridley Island terminal completed the first phase of expansion in 2013, including the installation of a third stacker-reclaimer. Continued work will see the terminal reach a capacity of 25 million tonnes when complete in the next few years.
Prince Rupert Port Authority President and CEO Don Krusel’s words in the 2013 annual report sum up the situation in Prince Rupert: “As we plan for new terminals and cargoes, the strong relationships between our operational team and partners will be more important than ever. Substantial preparation is taking place to ready the Port of Prince Rupert for dramatic increases in marine traffic, and to better understand our environmental footprint.”