FortisBC finalizes LNG supply agreement with BC Ferries to fuel new vessels

FortisBC will provide up to 300,000 gigajoules of LNG per year.

​FortisBC – a subsidiary of Fortis Inc. (TSX:FTS) – announced today that it will provide up to 300,000 gigajoules of liquefied natural gas (LNG) per year, the energy equivalent of 7.8 million litres of diesel fuel, for the next 10 years to help fuel BC Ferries’ three new intermediate class ferries.

The LNG will be supplied from FortisBC’s Tilbury facility located in Delta, which recently broke ground on a $400-million expansion and the Mt. Hayes facility, located on Vancouver Island. The Tilbury expansion will add 1.1 million gigajoules of LNG storage and approximately 34,000 gigajoules of liquefaction capacity per day. The existing Tilbury LNG facility has been operating safely since 1971, and the Mt. Hayes facility has been in operation since 2011. The ships will be fuelled in the traditional manner that BC Ferries takes on diesel fuel, with trucks making deliveries to the vessels during non-operational periods.

The use of LNG by BC Ferries will result in the reduction of an estimated 9,000 metric tonnes of carbon dioxide equivalent per year, the same as taking 1,900 passenger vehicles off the road annually, because natural gas is cleaner burning than traditional marine diesel fuel.

“BC Ferries has taken the lead as one of the first passenger ferry services in the country to use LNG,” said Doug Stout, FortisBC Vice-President of Market Development and External Relations. “This abundant, made-in-B.C. energy source can reduce greenhouse gas emissions between 15 to 25 per cent, providing cleaner air for British Columbians.”

Announced by BC Ferries in 2014, the vessels are being built with dual fuel capability (liquefied natural gas and marine diesel), and will be replacing the Queen of Burnaby (Comox-Powell River) and Queen of Nanaimo (Tsawwassen-Southern Gulf Islands). The third vessel will augment peak and shoulder season service on the Southern Gulf Islands route, plus provide refit relief around the fleet.

“We are pleased to collaborate with FortisBC, a safety leader in gas supply, for our new LNG vessels,” said Mark Wilson, BC Ferries’ Vice President of Engineering. “The use of LNG has both financial and environmental benefits and this contract will ensure we have a long-term, secure supply to power the new intermediate class vessels.”

FortisBC also provided $6 million in incentive funding toward the three new vessels, which was made possible following the creation of the Government of B.C.’s Greenhouse Gas Reduction regulation in 2012. Following those changes, FortisBC announced the $62-million program for fleet operators to offset part of the cost for a natural gas engine over a diesel engine.

“We’re working with FortisBC to establish the LNG transportation fuel market as part of our strategy to build and expand the province’s LNG industry,” said Bill Bennett, Minister of Energy and Mines. “Running ferries on LNG will reduce transportation costs, reduce greenhouse gas emissions, and grow the market for our abundant natural gas reserves.”

To date, the incentive program has resulted in commitments for almost 400 natural gas vehicles on the road or vessels in the water, potentially eliminating 38,000 metric tonnes of carbon emissions annually, the equivalent of taking 8,000 passenger vehicles off the road each year. To date, including this new commitment by BC Ferries, FortisBC has signed agreements for $28 million in incentive funding for land vehicles and marine vessels. With the current LNG price at Tilbury and Mt. Hayes the equivalent of $0.37 per diesel litre equivalent, FortisBC LNG for transportation customers are expected to significantly reduce their fuel costs.

The additional volumes of natural gas for transportation moving through FortisBC’s pipeline system benefit all natural gas customers. Better year-round utilization of FortisBC’s infrastructure, especially during the summer months when heating requirements are reduced, helps to keep natural gas delivery rates stable.