FortisBC grants C$5 million incentives for LNG ferries

DECEMBER 1, 2014 — Energy utility FortisBC announced today that it will provide Canadian $5 million in incentive funding toward two new vessels for Seaspan Ferries that will be able to run on liquefied natural gas (LNG).

Seaspan Ferries reported last month that it had awarded Sedef Shipyard of Istanbul, Turkey a contract for the construction of the two new dual-fueled (diesel and liquefied natural gas) ferries. The 148.9 m ferries, both expected to be in operation by late 2016, will accommodate up to 59 trailers. Construction is scheduled to start in early 2015 (see earlier story).

Fortis BC says the incentives were made possible following the creation of the British Columbia Government's Greenhouse Gas Reduction regulation in 2012 when FortisBC announced a $62 million program for fleet operators to offset part of the cost for a natural gas engine over a diesel engine.

"Our government supports these incentives which decrease operating costs, support the province's growing LNG sector and reduce greenhouse gas emissions," said Energy and Mines Minister Bill Bennett. "With the expansion of FortisBC's Tilbury LNG facility now underway, I look forward to seeing more agreements like this in the months and years ahead."

The funding agreement with Seaspan will result in the reduction of an estimated 5,450 metric tonnes per year of carbon emissions, the equivalent of taking more than 1,140 passenger cars off the road annually, because natural gas is cleaner burning than traditional marine diesel fuel. Seaspan has also agreed to a fueling agreement of up to 200,000 gigajoules of LNG per year which will come from FortisBC's Tilbury LNG facility in Delta, BC.

"B.C. has more natural gas fueled vehicles in our province as a result of this incentive program than anywhere else in Canada," said Doug Stout, FortisBC Vice-President of Market Development and External Relations. "The funding for these two marine vessels helps add to that tally, and it's further good news that Seaspan has chosen to get its LNG from FortisBC."

In 2014, Seaspan Ferries began shipping LNG in ISO containers from FortisBC's Tilbury facility for use by natural gas transportation customers on Vancouver Island.

"Switching to LNG is a natural progression for us," said Steve Roth, Seaspan Ferries Corporation Vice-President. "Since two of Seaspan's core values are efficiency and care, we are extremely pleased that moving to LNG will both reduce fuel costs and provide environmental benefits. FortisBC provided the expertise to help us discover the best fuel alternative for our ferry fleet."

To date, the incentive program has resulted in 400 natural gas vehicles on the road or vessels in the water, eliminating 38,000 metric tonnes of carbon emissions annually, the equivalent of taking 8,000 vehicles off the road each year. To date, FortisBC has signed agreements for $28 million in incentive funding for land vehicles and marine vessels.

To meet increased market demand for LNG, FortisBC has broken ground on a $400-million expansion of its Tilbury LNG facility in Delta which 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 in operation since 1971.

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.

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