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Baseefa Ltd

Early infrastructure contracts point to greenlighting of $40-billion Canadian LNG facility

17 July 2018

Reports claim that there are indications that LNG Canada, the Royal Dutch Shell Plc-led group that is considering building a huge C$40-billion (US$30 billion) liquefied natural gas facility in British Columbia, will be given the go-ahead after early activity at the project’s main site at Kitimat. LNG Canada would export significant amounts of gas across the Pacific to Asia.

Artist's impression of a section of the Kitimat plant - Image: LNG Canada
Artist's impression of a section of the Kitimat plant - Image: LNG Canada

Hopes that the project would be greenlighted received a boost in May when Malaysia’s Petronas took a 25% stake in the project, joining Shell and subsidiaries of PetroChina Co., Mitsubishi Corp. and Korea Gas Corp. in the venture, according to the Financial Post.

Bloomberg quoted service company executives likely to be involved with the project saying they were very optimistic the project would now go ahead.

In April, LNG Canada announced it has named a main contractor for the liquefaction plant, export terminal and pipeline it plans to build in Kitimat. A joint venture between the US-based Fluor Corporation and JGC Corporation, headquartered in Japan, won the contract to be LNG Canada’s engineering, procurement and construction contractor.

The company said the decision was based on the consortium’s plan for health, safety, First Nations and stakeholder management, financial strength, technical design, execution, contract price and schedule. Local people will be hired first to fill the thousands of positions required over the five-year construction period.

And in July, the awarding of a workforce accommodation contract to Houston-based Civeo Corp. is another sign that the project should go ahead. Civeo said it had been awarded contracts to supply temporary work camps at four locations along the Coastal GasLink pipeline from Dawson Creek in northeastern British Columbia to Kitimat.

LNG Canada proposes to ship as much as 28 million tons a year of LNG out of Kitimat, the equivalent of 10% of global supply in 2017. For Canada, whose energy exports are sold almost exclusively to the US at depressed prices because of the lack of a coastal facility, it means unlocking the Montney, a massive formation holding about half the total reserves of Qatar. It would also mean an investment triple the size of Canada’s largest single infrastructure project to date.

Earlier this year, British Columbia Premier John Horgan offered billions of dollars’ worth of tax breaks to liquefied natural gas producers in a bid to lure the Shell-led project to make a final decision about Kitimat, a move criticised by environmental groups.

Royal Dutch Shell and the four co-owners of LNG Canada are expected to make a final decision on whether to proceed with the project by the end of 2018.

 


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