Tilbury LNG Facility expansion and natural gas for transportation boosted by government announcement

FortisBC transportation and natural gas customers benefit from changes

SURREY, BC, Nov. 28, 2013 /CNW/ – FortisBC, a subsidiary of Fortis Inc. (TSX: FTS) commends the B.C. government for changes announced today that will help to increase FortisBC’s ability to rapidly and cost-effectively supply liquefied natural gas (LNG) to the B.C. marketplace.

The changes include updates to the greenhouse gas reduction regulation and directions to the BC Utilities Commission (BCUC), including the exemption of the planned expansion of FortisBC’s Tilbury LNG facility from a certificate of public convenience and necessity review by the BCUC.

“Today’s direction from government allows FortisBC to better support the province in the development of natural gas for the transportation sector. This announcement will also result in increased LNG supply, creating opportunities for industrial users and remote communities, bringing economic development and new jobs to B.C.” said John Walker, president and CEO of FortisBC.

“Government’s announcement, also positions FortisBC to move forward immediately with plans to expand our Tilbury LNG Facility. This project contemplates an investment of up to $400 million,” said Walker.

The investment in the FortisBC Energy Inc. gas utility would be subject to FortisBC Board approval and additional regulatory and environmental permits and approvals, including the B.C. Oil and Gas Commission. The expansion is expected to include a second tank and a new liquefier, both to be in service by mid-2016. The expansion will add approximately one million gigajoules of LNG storage, as well as 30,000 to 60,000 gigajoules of liquefaction capacity per day. It will also provide 300 person-years of construction jobs and about $4 million a year in taxes paid to various levels of government over time. FortisBC expects to finance the expansion as part of its natural gas regulated rate base.

“Government wanted to get out of the way and allow the transportation fuel component of the LNG industry develop quickly,” said Bill Bennett, minister of energy and mines and minister responsible for core review. “This $400-million investment in FortisBC’s Tilbury LNG Facility will build B.C.’s marketplace for the world’s cleanest fuel, LNG, and create over 300 person-years of employment in the Lower Mainland.”

As part of government’s direction, the BCUC will set the LNG dispensing rate at $4.35/gigajoule. This will help the transportation sector transition to adopt LNG as a fuel source and allow Northern and remote communities to switch to LNG, away from fuels like diesel.

Today the government also announced changes to its greenhouse gas reduction regulation. Key changes to benefit FortisBC customers include:

• an increase to the allowed capital per station for building LNG or compressed natural gas (CNG) fuelling stations that will meet the needs of customers with larger fleets;
• an increase in the incentive funding for safety training and upgrades to LNG or CNG vehicle maintenance facilities; and
• the expansion of incentives to rail and mining vehicles.

FortisBC expects that its gas utility customers will benefit from the additional volumes moving through the pipeline system to serve the expanded LNG facility. 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.

FortisBC Energy Inc. is a regulated utility focused on providing safe and reliable energy, including natural gas and propane. FortisBC Energy Inc. employs almost 1,800 British Columbians and serves approximately 945,000 customers in 125 B.C. communities. FortisBC Energy Inc. is indirectly wholly owned by Fortis Inc., the largest investor-owned distribution utility in Canada. FortisBC Energy Inc. owns and operates approximately 46,000 kilometres of natural gas transmission and distribution pipelines. Fortis Inc. shares are listed on the Toronto Stock Exchange and trade under the symbol FTS. Additional information can be accessed at www.fortisinc.com or www.sedar.com.

FortisBC Energy Inc. may include forward-looking statements in this media release which reflect management’s expectations regarding the Company’s future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as “anticipate,” “believe,” “expects,” “intend” “contemplate” and similar expressions have been used to identify the forward-looking statements. The forward looking statements in this media release include, but are not limited to, statements regarding: increased supply of LNG; job creation; taxes and the size of the investment in Tilbury Facility. These statements reflect management’s current beliefs and are based on information currently available to theCompany’smanagement. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking statements, which include but are not limited to receipt of applicable regulatory approvals and requested rate orders; absence of equipment breakdown, absence of environmental damage and health and safety issues, absence of adverse weather decisions and natural disasters, no significant operational disruptions or environmental liability as a result of a catastrophic event or environmental upset ability to obtain and maintain applicable permits, the adequacy of the corporation’s existing insurance arrangements, the First Nations settlement process does not adversely affect the corporation, the ability to maintain and renew collective bargaining agreements on acceptable terms, the ability to arrange sufficient and cost effective financing, no material adverse ratings actions by credit rating agencies, the competitiveness of natural gas pricing when compared with alternate sources of energy; continued population growth and new housing starts; the availability of natural gas supply; access to capital; interest rates and the ability to hedge certain risks. These factors or assumptions are subject to inherent risks and uncertainties surrounding future expectations generally that could cause actual results to differ materially from historical results or results anticipated by the forward-looking statements. Such risk factors include, but are not limited to, regulatory approval and rate orders risk; operational disruptions and environmental risk; price competitiveness risk; changes in economic conditions; natural gas supply risks; capital and credit ratings risk, interest rate risk and counterparty credit risk. These factors should be considered carefully and undue reliance should not be placed on the forward-looking statements. For additional information with respect to certain of these risks or factors, reference should be made to the Company’s Management Discussion & Analysis.

Media Backgrounder

Tilbury LNG Facility
LNG is natural gas that has been cooled to a low temperature of -162°C to become a liquid. FortisBC uses LNG to supplement gas supply during periods of peak demand as well as for transportation customers. In operation since 1971, our LNG facility on Tilbury Island in Delta, B.C. is located near the FortisBC transmission pipeline system just a few kilometres from metropolitan Vancouver.

From the Tilbury LNG Facility, LNG is delivered by tanker truck to the LNG dispensing station on a customer’s property or at a commercial fuelling station along a regional corridor.

• The current Tilbury LNG Facility can liquefy 5,000 gigajoules of natural gas per day.
• Since LNG takes up 1/600th of the volume of gas, the tank, with a volume of 28,000 cubic metres, holds the equivalent of 17 million cubic metres (600,000 gigajoules) of natural gas — enough gas to keep a community of 12,000 warm for about 45 very cold days.

LNG dispensing rate
The LNG dispensing rate has been set at $4.35/gigajoule. This is intended to cover the cost of the transportation of the gas to the facility, liquefaction and dispensing. Customers will also pay the natural gas commodity cost per gigajoule.

Environmental benefits of natural gas for transportation
Converting fleets and vehicles to natural gas not only helps the province meet its greenhouse gas reduction goals but also helps improve air quality in the communities in which they serve.

• Natural gas burns cleaner than gasoline or diesel, which can result in less pollution and greenhouse gases.
• Carbon dioxide (CO₂) emissions, the principal greenhouse gas that contributes to global warming, are reduced by 20 to 30 per cent.
• Natural gas vehicles emit virtually no particulate matter, the harmful microscopic component of air pollution that penetrates deeply into the lungs.
• Businesses converting their fleet to natural gas will help meet the province’s requirements for greenhouse gas reductions under the B.C. Greenhouse Gas Reduction Targets Act.
• Natural gas for transportation also helps achieve B.C.’s energy objectives defined under the Clean Energy Act.

Other benefits

• More stable fuel costs: historically, natural gas commodity prices have been shown to be more stable, compared to the fluctuation of prices for diesel and gasoline. Natural gas fuel costs have historically been 25 to 40 per cent less than diesel.
• Fewer emissions: natural gas is a cleaner burning, lower carbon fuel than diesel or gasoline.
• Quieter: operators of natural gas waste hauler trucks report they are quieter than comparable diesel trucks.

SOURCE FortisBC

For further information:

MEDIA CONTACT:

Michael Allison
Corporate Communications Advisor
FortisBC
Phone: 604-592-7536
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