LNG

The Ksi Lisims LNG Partnership, a development joint venture of the Nisga’a Nation, Rockies LNG and Western LNG LLC for a floating liquefaction and export plant near the port of Prince Rupert in British Columbia, has signed a 20-year sale and purchase agreement with the Shell subsidiary, Shell Eastern Trading.

Under the SPA, Shell will purchase 2 million tonnes of LNG per annum from the Ksi Lisims project on a free-on-board basis in what is the first LNG offtake agreement executed by the Ksi Lisims venture.

The Ksi Lisims FLNG platform will receive feed gas from the prolific shale-gas basin of northeast BC. The venture proposes to produce 12 MTPA at Wil Milit, located north of Prince Rupert and near the Nisga’a tribal village of Gingolx.

Ksi Lisims LNG’s governance structure provides each project proponent, the Nisga’a Nation, Rockies LNG and Western LNG, with input into project development, management and operations.

Innovative

“The Ksi Lisims LNG project is an innovative development for North America” said Davis Thames, President and CEO of Western.

The project will use a floating production units built by Samsung Heavy Industries and an all-electric process technology developed by Black & Veatch.

“The strong fundamentals of our project have earned the confidence of some of the most established companies in the LNG industry. We look forward to continuing to work with Shell and our other customers as we move toward reaching a final investment decision,” Thames stated.

“Ksi Lisims LNG will play an important role in the long-term economic growth of the Nisga’a Nation and other nations with which we work and we remain committed to being good partners with them,” he explained.

Thames noted that the work with the Nisga’a Nation and Rockies LNG had produced a “unique value proposition” for customers.

Steve Hill, Executive Vice President of Shell Energy, said that LNG was a critical pillar of global energy security and global demand is set to increase in the years to come.

Diverse portfolio

“We are pleased to sign this agreement with Ksi Lisims LNG which will help Shell to continue providing diverse and flexible LNG supply to its customers,” Hill stated.

Eva Clayton, president of the Nisga’a Lisims Government said her people had been striving to grow economic opportunities.

“Ksi Lisims LNG is the cornerstone of a brighter future for our people. As the project continues to pick up momentum, evidenced by this agreement with Shell, the Nisga’a people are now able to envision the opportunity and prosperity that Ksi Lisims LNG will bring,” Clayton declared.

Ksi Lisims LNG said it was represented by international law firm Baker Botts LLP in the drafting and negotiation of the SPA.

“We’re proud to be working to deliver the world’s cleanest natural gas to markets that need it most,” said Charlotte Raggett, President and CEO of Rockies LNG.

“Canada is an ideal global energy supplier, producing the world’s most responsible and lowest-emission natural gas at the shortest distance from Asia in the Americas,” she added.

China Petroleum & Chemical Corp., known as Sinopec, has signed a cargo supply deal with QatarEnergy to receive 4 million tonnes per annum of cargoes from the Ras Laffan plant in the Arabian Gulf from 2026.

US energy company Sempra, operator of the Cameron LNG export plant in Louisiana, has signed an amended engineering, procurement and construction (EPC) contract with engineering firm Bechtel Energy for the Port Arthur LNG export project in Texas.

Bechtel and the Sempra unit, Sempra Infrastructure, have amended the EPC contract for the proposed Phase 1 liquefaction project in Jefferson County in Texas to a new price of approximately $10.5 billion.

“The execution of the final contract is a critical step in advancing Phase 1 of Port Arthur LNG toward a final investment decision,” said Justin Bird, Chief Executive of the Sempra Infrastructure unit.

“Based on robust customer interest, we know that Port Arthur LNG is highly attractive to the global market and we look forward to providing customers with access to secure, abundant and reliable US LNG,” added Bird.

Paul Marsden, President of Bechtel, said the firm was delighted to continue its partnership with Sempra after constructing the Cameron export plant at Hackberry.

“Alongside Sempra Infrastructure, Bechtel is ready to continue active construction in the Gulf Coast and bring more opportunities to the local region” added Marsden.

Contract scope

The Sempra EPC contract with Bechtel covers engineering, procurement, construction, commissioning, start-up, performance testing and operator training activities for Phase 1 of the new Texas plant.

The Port Arthur Phase 1 project has all its permits and is expected to include an initial two liquefaction Trains with a combined 13.5 million tonnes per annum of output.

Sempra said it was already working on a similarly-sized Port Arthur LNG Phase 2 project with “active marketing” taking place. This would take total production eventually to 27 MTPA.

California-based Sempra has signed a series of supply deals for Port Arthur Phase 1 involving four companies.

They are the Polish Oil & Gas Company, the German utility RWE Supply & Trading, UK chemicals company INEOS and US major ConocoPhillips.

The Sempra Infrastructure unit of Sempra also contains the other LNG assets like the Cameron plant and the Costa Azul export project in Mexico.

Earlier in 2022 Sempra agreed to sell a 10 percent interest in Sempra Infrastructure Partners to a subsidiary of the Abu Dhabi Investment Authority (ADIA), the wealth fund in the United Arab Emirates, for $1.78Bln in cash.

The San Diego-based utility business of Sempra includes San Diego Gas & Electric Co. and Southern California Gas Co. 

The liquefied natural gas export expansion project in Papua New Guinea has launched the first phase of front-end engineering and design studies for the Papua LNG project's upstream production facilities.

Shell has been selected by QatarEnergy as a fifth partner in the North Field East expansion project in Qatar, described by Shell as the single largest project in the history of the liquefied natural gas industry.

Shell said it would hold a 25 percent share in a joint venture company which will own 25 percent of part of the North Field East project, including the four mega-Trains for processing a combined nameplate LNG capacity of 32 million tonnes per annum.

Shell said its investment in this LNG expansion would support delivery of much-needed supplies of natural gas to markets around the world.

“I am honoured that Shell has been selected by QatarEnergy. Through its pioneering integration with carbon capture and storage, this landmark project will help provide LNG the world urgently needs,” declared Shell Chief Executive Ben van Beurden.

“This agreement deepens our strategic partnership with QatarEnergy which includes multiple international partnerships such as the world-class Pearl GTL asset,” added Van Beurden.

“We are committed to maximize the value of the LNG expansion for the State of Qatar and continue to be a trusted, reliable and long-term partner in Qatar’s continued progress,” he stated.

ExxonMobil role

ExxonMobil Corp., the long-standing partner of Qatar in oil and gas and LNG, was chosen in June to be the fourth signatory of a joint venture stake in the North Field East expansion.

ExxonMobil, like Shell, was awarded a 25 percent interest in the fourth North Field East joint venture that will take QatarEnergy’s overall output to 110 million tonnes per annum from 77 MTPA.

The US major has had a presence in Qatar since 1955 and has long supported the development of the country’s LNG industry and energy sector.

QatarEnergy and ExxonMobil are also partners in the current transformation of the Golden Pass LNG import terminal on the Sabine-Neches Waterway in Texas into an export plant.

The terms for Qatar's NFE expansion joint ventures with Shell and ExxonMobil are the same as those given to the other three shareholders named earlier, France’s TotalEnergies, Italy’s Eni and US major ConocoPhillips.

The expansion of North Field East and increased LNG export capacity is one of Qatar’s key energy objectives.

QatarEnergy is the operator and commenced the North Field East project in 2019. First LNG from North Field East is expected in 2026.

The upstream part of the project is already under way to develop the southeast area of the North Field via eight platforms, 80 wells and gas pipelines to the onshore liquefaction plant.

Australian and African LNG export plants operator, US major Chevron Corp., is increasing its LNG trading role after signing cargo supply agreements with the largest US exporter Cheniere Energy and newcomer Venture Global with one plant in operation in Louisiana and three others under development in the state.

McDermott, the US energy and LNG project engineering company, has outlined part of the scope of the planned Fujairah LNG production facility being developed in the fifth-largest emirate by area of the seven United Arab Emirates.

McDermott was awarded the contract by Abu Dhabi National Oil Co. (Adnoc) to provide front-end engineering and design for the plant.

The Fujairah project will be centred around a liquefaction plant with a total capacity of 9.6 million tonnes per annum.

Fujairah is located outside the Arabian Gulf on the Gulf of Oman. The shores of Fujairah extend for 70 kilometres along the coast from the city of Fujairah.

The emirate shares its boundaries with the emirates of Sharjah and Ras Al Khaimah to the west and the south respectively.

In the north, Fujairah shares its international border with the Sultanate of Oman, an established LNG producer supplying customers in Asia.

Electric drives

“The plant will be designed with electric drives for the liquefaction compressors and will incorporate several features that significantly reduce greenhouse-gas emissions, capitalizing on the experience McDermott,” said the Houston, Texas-based company.

McDermott said the Fujairah plant would benefit from the “robust capabilities and experience” of the US company in FEED performance.

Our biggest differentiator is our ability to execute this FEED on a fast-track basis incorporating all of the characteristics required to support the award of EPC contracts which are expected in 2023,” said Tareq Kawash, Senior Vice President for Onshore at McDermott.

McDermott was involved in initial phases of Adnoc’s LNG development in the late 1980s that resulted in the Das Island plant in Abu Dhabi, the second-largest emirate after Dubai.

The US company constructed the storage facilities for both LNG and liquified petroleum gas (LPG) on an EPC basis on Das Island.

“We are proud to continue our long history with Adnoc by playing an important role in helping to define the next phase of LNG development in the UAE,” added Kawash.

McDermott noted that it was one of the most experienced engineering and construction firms serving the LNG market and has delivered more than 30 LNG Pre-FEED and FEED projects over the past 10 years.

The Fujairah LNG facilities FEED will be performed by teams in McDermott's offices in London and the UAE.

Australian LNG plant operator Santos, which has plant and project stakes in Queensland and in the Northern Territory as well as in Papua New Guinea, reported record free cash flow of US$1.5 billion and underlying profit of US$946 million after its merger with Oil Search.

The free cash flow was double the US$740 million posted in the previous year the underlying profits were 230 percent higher than the US$287M of profits reported in 2020.

The Adelaide-based company achieved net profits of US$658M versus losses of US$357M in the previous year.

“Net profit includes losses on commodity hedging and costs associated with acquisitions and one-off tax adjustments, and is significantly higher than the corresponding period mainly due to impairments included in the previous year,” explained Santos.

The Santos low-cost operating model delivered cash flow breakeven of US$21 per barrel of oil in 2021 and the Board resolved to pay a final dividend of US$0.85 cents per share, 70 percent higher than the previous final dividend.

Santos said the results reflected significantly higher oil and LNG prices compared with 2020 due to the recovery in global energy demand amid supply constraints from lower capital investment through the Covid-19 pandemic.

The earnings contained three weeks contribution from the Oil Search assets.

Highlight

“The highlight of the year was the completion of our merger with Oil Search,” said Santos Chief Executive Kevin Gallagher.

The CEO stated that the merger would drive “unrivalled growth opportunities” over the next decade.

“The financial results include only three weeks of the merged company. Had the merger been in place for all of 2021, the combined asset portfolio would have generated more than US$2.3Bln in free cash flow for the year,” explained Gallagher.

“We will now seek to further optimise the portfolio, reduce gearing and conduct a review of our capital management framework including returns to shareholders,” he added.

In the 2022 outlook, Santos said production was expected to increase to a range of 100 million to 110 million barrels of oil equivalent, primarily due to higher production from Papua New Guinea assets following the Oil Search merger.

This is expected to be offset by a lower share of Bayu-Undan production in the Timor Sea, which is expected to be about 10 million barrels of oil equivalent less than 2021, due to a lower average working interest following the 25 percent sell-down of a stake to South Korea’s SK E&S in 2021.

Santos noted that there would also be lower gross production from Bayu-Undan as the field approaches end of field life and lower net entitlement under the Production Sharing Contract due to higher forecast LNG prices.

Sales volumes in 2022 are expected to be in the range of 110 million boe and 120M boe.

Santos said major growth projects capital expenditure was expected to be in the range of US$1.15Bln to US$1.3Bln.

“A contingent amount of up to approximately US$400M could be added should the Dorado (Australia) and Pikka (Alaska) projects take final investment decisions. Guidance assumes current Santos interest in all projects,” said the company.

“At an average oil price of approximately US$65 per barrel in 2022, it is expected sufficient free cash flow would be generated to fund forecast major growth projects,” it added.

Santos said its AGM would be held on Tuesday, May 3 and the closing date for receipt of nominations from persons wishing to be considered for election as directors is Thursday, February 24.

The leader of the Haisla First Nation in British Columbia, Chief Councillor Crystal Smith, along with Pembina Pipeline Corp. Interim President and Chief Executive Scott Burrows and the Cedar LNG CEO Doug Arnell have spoken with optimism about the future development of the Cedar LNG project as it awarded an engineering contract.

Chief Councillor Smith and Pembina's Burrows said the 50-50 partnership’s joint venture had reached critical points in developing the floating LNG export plant near Kitimat in BC.

The FLNG project will be located in the Douglas Channel  and is expected have a liquefaction capacity of up to 4 million tonnes per annum of LNG.

Feed gas for Cedar FLNG will be sourced from the prolific Montney natural gas resource play in northeast BC.

Cedar LNG said it was pleased to announce an agreement with liquefaction technology firm Black & Veatch and South Korean shipbuilder Samsung Heavy Industries (SHI) for the front-end engineering and design (FEED) of the project's proposed floating liquefaction, storage and offloading units.

“Cedar LNG is rooted in meaningfully creating a low-carbon, Indigenous-led business that respects local values and protects the environment,” said Cedar's CEO Arnell.

“The project's low-carbon footprint, coupled with the use of Black & Veatch and Samsung's expertise and technology will result in a state-of-the-art facility the Haisla Nation, British Columbia and Canada can be proud of,” he stated.

FID in 2023

Cedar LNG expects to make a final investment decision in 2023 following completion of the environmental assessment process.

Subject to additional factors, including regulatory and other approvals, the expected in-service date for the project is 2027.

Both Smith and Burrows said their venture was strategically positioned to leverage Canada's abundant natural gas supply and “provide a critical, Indigenous-partnered solution” to support the global clean energy transition.

With recent advancements in the project's regulatory and engineering development, Smith outlined what it meant for the region.

“The Cedar LNG project will be the largest First Nation-owned infrastructure project in Canada, creating jobs, contracting and other economic opportunities for the Haisla Nation, the community of Kitimat, neighbouring Indigenous Nations, and the local region,” stated Smith.

“Cedar LNG represents long-term growth for our region in a way that protects our land and environment, and we are excited to see the project move forward in its environmental assessment process with innovative technology and reduced environmental footprint,” she explained.

Review phase

The application for an Environmental Assessment Certificate (EAC) was recently submitted to the British Columbia Environmental Assessment Office, moving the project into the 180-day application review phase.

This key landmark follows detailed engineering studies and engagement with Indigenous and local communities.

“The submission of our application for an EAC represents another significant step forward in exporting Canadian LNG to overseas markets, while supporting long-term prosperity for the Haisla Nation and the region,” explained Pembina’s Burrows.

“Each time we've returned to our design, whether to include community input or account for leading technology, we've made important improvements that have resulted in a superior project that respects the values of the local community and minimizes environmental effects,” declared the Pembina Interim CEO.

An attack on the LNG and oil and gas-producing United Arab Emirates has led a UK-based shipping security firm to raise a commercial shipping warning in the region to “substantial” and for Saudi Arabian and UAE-flagged ships to “severe”.