Resource World Magazine

56 www.resourceworld.com J U N E / J U L Y 2 0 1 8 Oil Patch Report by Bruce Lantz A fter a long hiatus brought about by the energy industry downturn, LNG Canada is back on track to establish an export terminal in Kitimat on British Columbia's west coast. Officials of the joint venture recently announced that a final investment decision (FID) is expected in December 2018 and an engineering joint venture based in the United States and Japan has been selected as the prime contractor for the Shell-led project. Fluor Corp. [FLR-NYSE] of Irving, Texas, and JGC Corporation of Yokohama [JP-1963] Japan, won the contract for engineering, procurement and construction of the terminal for a price some reports pegged at US $14 billion. The total facility is expected to cost up to US $40 billion, including the US $4.7 billion cost of TransCanada Corp.'s [TRP-TSX, NYSE] Coastal GasLink pipeline, which would carry 1.7 billion cubic feet of gas daily a distance of 670 km from the Montney play in northeastern BC to Kitimat. The pipeline's con - struction will take two to three years to complete. However, there is some doubt as to whether the FID will give the project the green light. LNG Canada boss Andy Calitz recently told an LNG conference that construction on the terminal would start this year, but later a company statement would only say the FID would be made before the end of 2018. "LNG Canada will submit a Decision Support Package (back - ground information) to its joint venture participants (JVPs) later in 2018 for their review and a final investment decision," Susannah Pierce, Director External Relations, LNG Canada, told Resource World. The joint venture consists of Royal Dutch Shell PLC (50%), PetroChina Co. Ltd. (20%), Mitsubishi Corp. and Korea Gas Corp. (15% each) "The exact date of that decision, however, is up to the JVPs to make." The project, which will employ 4,500 to 7,500 workers at its construction peak in 2021 and 500-800 full-time workers at full build-out, involves cooling the shipped natural gas in processing units, or 'trains', each able to handle 6.5 million tonnes a year; full build-out will include four trains, with two being built in phase one, to -160 degrees Celsius, which turns it into a liquid. It will be stored in large tanks then loaded onto specially designed LNG vessels for shipment overseas to Asian markets, with each joint venture partner responsible for marketing their equity share of the product. "Asia is the most likely market for their gas supply given cur - rent demand forecasts," Pierce said, adding that if all goes well, LNG would be headed to those markets by the mid-2020s. The FID was expected in 2016 but was delayed due to the industry downturn's sagging prices and an unfavourable supply- demand outlook that cast doubt on the project's viability. "Since that time, the team has worked to ensure the project is cost-com- petitive and affordable for our JVPs," Pierce said. "We went back to the market and recently selected an engineering, procurement and construction contractor who will be responsible for con- structing the plant on a lump sum basis, maintaining existing environmental authorizations and has worked with all levels of government to remove barriers to the project's competitiveness with other projects in the US Gulf Coast." The project has been controversial, even at the government level. BC Green Party Leader, Andrew Weaver, concerned about greenhouse gas emissions from the Kitimat plant in the face of his party's target of a 40% GHGs reduction by 2030, has threatened to bring the NDP minority government down over its pursuit of LNG projects. However, Premier John Horgan says he has a commitment from the Greens to work with government on a "robust, realis - tic" plan "that can meet the challenges we all face to meet those objectives …" Given the ongoing controversy around pipeline construction in Canada, in particular the war of words between premiers and other politicians in BC and neighbouring Alberta, some might question the viability of that aspect of the Kitimat project. But Pierce isn't worried. "The Coastal GasLink pipeline has met all necessary regulatory requirements and is ready to move forward pending an FID decision by LNG Canada's JVPs," she said. Artist's rendering of LNG Canada's proposed liquid natural gas terminal at Kitimat on the west coast of British Columbia. Illustration courtesy LNG Canada. LNG Canada awaiting go ahead for Kitimat LNG plant

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