Resource World Magazine

64 www.resourceworld.com J U N E / J U L Y 2 0 1 9 Oil Patch Report by Bruce Lantz L argely overshadowed by the larger, high-profile LNG Canada Project in recent months, Chevron's plan to double the size of its neighbouring Kitimat LNG proposal is again in the headlines. And with both plants situated in the same area, it could make Canada's west coast a powerhouse on world markets. Chevron Canada Ltd. [CVX-NYSE] and Woodside Energy Ltd. [WPL-ASX] recently announced their application to the National Energy Board for a new licence for Kitimat LNG that would see it nearly double in size to produce 18 million tonnes per annum (mtpa) when it goes into pro - duction, likely around 2029. The revised plant design could include up to three LNG "trains" (processing units) instead of the two originally planned, and could fea- ture an innovative all-electric plant design. Chevron Canada is a unit of global oil major Chevron Corp. and Woodside is the largest Australian natural gas pro- ducer. They are 50-50 partners in the joint venture. "Since 2015, Chevron and Woodside have made significant progress in enhanc- ing K(itimat)LNG competitiveness relative to other global LNG projects, reducing LNG unit costs by over 45% and incorpo- rating a new all-electric LNG plant design," Leif Sollid, Chevron communications team lead, told Resource World magazine. "As part of this work, Chevron and Woodside have re-evaluated the originally proposed two-train, 10 mtpa LNG plant development concept and are now propos - ing a revised plant design that may include up to three LNG trains and deliver up to 18 mtpa of LNG." The joint venture would not disclose a cost for the proposed project, which will be located at Bish Cove, about 15 km down the Douglas Channel from Kitimat, but esti - mates are that the joint venture already has spent hundreds of millions of dollars on a major road upgrade and site preparations. The Kitimat LNG announcement follows a final investment decision last October by the backers of LNG Canada, also to be located in Kitimat, to go forward with its US$40 billion project, with produc - tion slated for 2025. This project, led by Royal Dutch Shell [RDSA-London] and including partners Petronas, Petrochina [PTR-NYSE], Mitsubishi [8058-T] and Korea Gas [036460-Korea SE], plans for two trains producing 14 mtpa with pos - sible expansion to four, and has been touted as the largest energy investment in Canadian history with the lowest car- bon intensity of any large-scale project in the world, using renewable hydroelectric power and efficient gas turbines. The LNG Canada announcement, while seen as positive news in northeastern BC where the gas will originate and by a market-starved industry that desperately needs offshore buyers, sparked a strident and continuing protest by environmen - talists objecting to the pipelines needed to deliver the natural gas to Kitimat, and to the ships that will ferry the product to Asian buyers. The likelihood of a second Kitimat project will only serve to fan those protest flames. As if that wasn't enough controversy, Chevron Corp.'s announcement in April that it had a definitive agreement to buy Anadarko Petroleum Corp. [APC-NYSE] for US$33 billion was followed quickly by Occidental Petroleum Corp. [OXY- NYSE] bidding US$38 billion. In early May Anadarko accepted the Occidental offer and agreed to pay a US$1 billion ter - mination fee to Chevron. The transaction is expected to close in the second half of 2019. While a date for a final investment decision on Kitimat LNG has not been dis- closed, Sollid said the NEB decision should come by year's end. "Chevron's application to the National Energy Board is a key regulatory undertak- ing and supports Chevron and Woodside's desire to deliver a globally competitive Kitimat LNG Project that is aligned with global LNG market demand, and which benefits British Columbians, First Nations and all Canadians," he said. Sollid expects regulators will look favourably on the plan to electrify the Kitimat LNG plant. "An all-electric Kitimat LNG facility that is powered by renewable hydroelectricity will set the global standard for the lowest emissions intensity of any large-scale LNG facility," he said. "Kitimat LNG is aligned with the Province of British Columbia's CleanBC strategy and vision for sustainable growth, using clean energy to power the economy, support job growth while driv - ing down GHG emissions." He said the revised plant concept con- sists of electrically-powered liquefaction trains (known as e-drives) powered by renewable hydroelectricity to cool and compress the natural gas. But they aren't stopping there. Chevron and Woodside are continuing to assess additional electri - fication opportunities to reduce emissions across the project's value chain, he said. The partners are in discussions with BC Hydro about the plant's electricity needs — some have estimated the project would require almost the total output, about two- thirds, of the now-under-construction Site C dam near Fort St. John, BC. But he declined to release any further informa - Kitimat LNG Project to double production capacity

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