LNG

US engineering company KBR, a world leader in liquefaction plant construction projects, said it would exit most of its LNG on-site building ventures and other related projects because of the global reduction in energy investments.

The Houston, Texas-based company will now refocus on its government contracts and technology businesses, according to a conference call statement to investors and letters to employees from Chief Executive Stuart Bradie.

“KBR will no longer engage in lump sum, blue collar construction services,” said Bradie, explaining that the Covid-19 pandemic accelerated the decision to leave fixed-contract energy projects.

KBR holds contracts for engineering and construction services for several LNG export projects, including Freeport LNG’s Train 4 expansion at Quintana Island in Texas, Pieridae Energy’s proposed Goldboro LNG facility in the Canadian province of Nova Scotia and Glenfarne Group's Magnolia LNG project in Louisiana.

Freeport LNG has delayed its expansion project to 2021 and planned to seek new bids for construction.

KBR gave no details of potential impairments in its next earnings because of the LNG and energy construction pull-back, though it said in a recent strategy Webcast on June 16 that it expected the energy business to be “marginally profitable” in 2020.

CEO Bradie is expected to disclose more details when the second-quarter results are released in July

Bradie told investors in the conference call that about 85 percent of the company's forecast earnings for 2020 are expected to come from the government-related contract business, up from about 11 percent in 2015.

KBR said the changes would mean “significant realignment” in some offices as the management transforms the business to the new structure and to new ways of working, while exiting certain markets and regions.

KBR appears to be only existing “construction services” and is expected to continue with its consulting business in the energy and related sectors.

Its most recent energy contract awarded in May 2020, was a master service agreement and feasibility study by Japanese resources company JX Nippon Oil & Gas Exploration Corp.

The contracts will be executed by KBR’s Energy Solutions division, which includes sectors such as onshore oil and gas, LNG liquefaction and regasification, floating LNG and refining.

KBR said it was building on a strong and successful portfolio in the of options for Carbon Capture and Sequestration (CCS), alongside blue hydrogen production relating to oil and gas fields in Southeast Asia.

In the JX Nippon project, KBR will provide technical consultancy services in relation to developing concepts and technology recommendations for the capture of carbon-dioxide (CO2), re-injection and production of blue (carbon free) hydrogen.

The project will be led primarily from KBR's consulting hub in Singapore.

Japanese shipping company Mitsui OSK Lines and a subsidiary of German utility Uniper signed a contract to build and charter an LNG floating storage and regasification unit for the planned import terminal at the German North Sea port of Wilhelmshaven.

Woodside Petroleum, the Australian LNG plant operator, has signed a firm supply agreement with Uniper Global Commodities, a unit of the Germany utility Uniper.

Qatar Petroleum and German utility Uniper are in firm talks on the supply of LNG by Qatargas to the proposed import terminal at the North Sea port of Wilhemshaven in the state of Lower Saxony.

Pieridae Energy, the developer of the Goldboro LNG project in the Canadian Atlantic province of Nova Scotia, said it had negotiated extensions of the key deadlines under its 20-year supply agreement with German utility Uniper.

These include expected commercial deliveries of shipments to Uniper to start between November 30, 2024 and May 31, 2025.

The Calgary-based company is seeking to build a liquefaction plant with an initial two Trains northeast of the Nova Scotia capital, Halifax.

Pieridae added that it had also extended to September 30, 2020, its deadline for making a financial investment decision (FID) for the Goldboro plant. The FID had previously been expected by mid-2020.

The 20-year agreement with Uniper is for 5 million tonnes per annum of LNG, half of the plant’s expected first phase capacity.

“These extensions allow us to complete the work needed to make a final investment decision for the Goldboro project,” said Pieridae Chief Executive Alfred Sorensen.

The company said it had most of the necessary Canadian federal and provincial regulatory permits to proceed.

Pieridae awarded a contract in April 2019 to US energy engineering company KBR to perform a review of an amended version of a previously prepared front-end engineering and design study of the Goldboro plant.

KBR will also conduct an “open-book estimate” necessary for an engineering, procurement, construction, and commissioning agreement with the intention of entering into an EPC contract by the time of the FID on Goldboro.

“We continue to have ongoing discussions with KBR that will ultimately lead to finalized designs and fixed costs for the project. We expect the vast majority of that work to be completed near the end of 2019, which will move us closer to FID,” explained Sorensen

Pieridae additionally signed an agreement in June 2019 with Shell Canada Energy to acquire all of Shell’s midstream and upstream assets in the southern foothills of Alberta province to boost its LNG feed-gas reserves.

The purchase price of the Shell Alberta assets is C$190 million (US$145M), including C$175M in cash to be raised by Pieridae through the issuance of debt and equity.

The balance will be in the form of the issuance of Pieridae common shares to Shell with an aggregate value of C$15M. Its shares are on the venture list of the Toronto Stock Exchange for small commodities companies.

The whole deal is expected to be finalized in the third quarter of 2019.

“Our recent announcement that we will be acquiring key Shell assets in the Alberta Foothills helps us secure much of the remaining conventional natural gas supply needed for the first Train at Goldboro,” said Sorensen.

“This is Eastern Canada’s only LNG facility with the majority of its permits, a pipeline route and an anchor customer. Goldboro LNG will create thousands of Canadian jobs and establish a solid global market for Canadian energy for years to come,” stated the CEO.

Shell has helped Goldboro LNG move forward as its own LNG Canada project in British Columbia survives as the only large-scale venture in BC from a dozen previously proposed.

Shell’s plans will cost C$40 billion (US$30.2Bln) to implement compared with the C$10Bln projected cost of the Nova Scotia plant.

The conventional natural gas assets Pieridae controls are expected to allow the company to access up to US$1.5 billion in credit support from the German government to develop these upstream assets as part of the Goldboro project.

Pieridae Energy, the developer of the German-backed Goldboro LNG project in the Canadian Atlantic province of Nova Scotia, signed a purchase and sales agreement with Shell Canada Energy to acquire all of Shell’s midstream and upstream assets in the southern foothills of Alberta province to boost its LNG feed-gas reserves.

Pieridae Energy, developer of the German-backed Goldboro LNG project in the Canadian Atlantic province of Nova Scotia, has had its shares suspended on the Toronto stock market pending a material announcement.

Uniper, the German energy company and utility, has launched an open season to test interest in Germany's first liquefied natural gas import terminal planned for the North Sea port of Wilhelmshaven.

KBR, the US energy and LNG engineering company, said it was awarded a contract by Toronto-listed Pieridae Energy for a two-Train export facility at Goldboro in the Canadian Atlantic Coast province of Nova Scotia as the German-backed venture moves closer to its final investment decision.

Pieridae Energy, developer of the German-backed Goldboro LNG export project in the Canadian province of Nova Scotia, has entered into agreements for a private placement of shares with a group of banks and brokers and two other transactions to raise some funding.