July 28, 2014 / 10:14 PM / 4 years ago

Fortis pushes ahead with Canada LNG for transport expansion

VANCOUVER, July 28 (Reuters) - Fortis Inc is pushing ahead with a C$400 million ($370.4 million) expansion of its Tilbury liquefied natural gas (LNG) plant in British Columbia, as the gas distributor looks to meet growing domestic demand for the super-chilled fuel.

Bechtel Canada has been chosen to lead the project, which will add 1.1 million gigajoules of storage capacity at the Vancouver-area facility and boost liquefaction capacity by 34,000 gigajoules per day, Fortis said on Monday.

The plant was originally designed to store natural gas for periods of peak household demand. The expansion will allow it to meet burgeoning demand for LNG from the transportation sector, particularly from long-haul trucking companies.

Natural gas, abundant in North America, is increasingly being touted as a cheaper and greener alternative to diesel for everything from garbage trucks to long-haul tractor trailers and mining vehicles.

Numerous trucking companies have moved to convert portions of their fleets to LNG, but broader adoption has fallen short of initial expectations. Challenges remain around fueling infrastructure and high operating costs.

While Fortis is increasing spending on its domestic LNG plant, Royal Dutch Shell recently scrapped a small-scale liquefaction unit it was building near Calgary, citing slower-than-expected demand growth in the transport sector.

Shell has also paused work on two other North American liquefaction plants, located near marine shipping corridors, but said those projects may resume due to better opportunities for LNG-powered marine vessels.

Fortis said it has signed LNG service deals with various transportation firms and also provides LNG to remote northern communities that use it as an alternative to diesel.

The St. Johns, Newfoundland-based company is also eyeing opportunities in British Columbia’s busy mining sector, along with emerging technologies like LNG-powered trains.

Construction on the Tilbury expansion project is expected to start in September, with work wrapping up in 2016. ($1 = 1.0798 Canadian Dollars) (Reporting by Julie Gordon; Editing by David Gregorio)

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