LNG

Woodfibre LNG, the mid-scale project near the town of Squamish in British Columbia, has issued a notice to proceed to US energy engineering contractor McDermott International.

Woodfibre LNG, the mid-scale project near the town of Squamish in British Columbia, has started hiring workers for wide range of posts as the projects development gathers pace.

Woodfibre LNG, the mid-scale project near the town of Squamish in British Columbia, has signed an engineering, procurement, fabrication and construction (EPFC) contract with Houston, Texas-based McDermott International.

McDermott said the EPFC contract was an important step in advancing detailed engineering and construction schedules in advance of Woodfibre LNG issuing a notice to proceed.

The proposed Woodfibre plant is owned by Pacific Energy Corp., a subsidiary of founder Sukanto Tanoto’s Royal Golden Eagle Group and whose main offices are in Singapore, Jakarta, Beijing and Hong Kong.

The Woodfibre project comprises a single liquefaction Train with 2,1 million tonnes per annum of LNG production and storage capacity of 250,000 cubic metres.

“Woodfibre LNG will use hydro-electricity for the main liquefaction process, and will include technology that enables liquefaction machinery to restart without flaring, a recycling system for boil-off gas, along with additional transformers, switchgear and transmission lines,” said a statement.

Woodfibre LNG already has two offtake agreements signed with UK major BP, meaning over 70 percent of Woodfibre's annual throughput has been sold.

“Our contract with McDermott is a positive step forward for this substantial piece of clean-energy infrastructure,” said Christine Kennedy, President of Woodfibre LNG.

Squamish nation

Woodfibre has engaged with the Canadian Squamish First Nation in designing the environmental aspects of the facility

“Together, we will be building the lowest-emission, most sustainable and innovative LNG export facility in the world,” added Kennedy.

McDermott will manage onshore construction, leveraging Canadian-based contractors and commitments included in Woodfibre LNG's Impact Benefit Agreements with the Squamish Nation.

It is estimated that 650 people will be working on the Woodfibre LNG site at peak construction.

“The EPFC contract commits McDermott to Woodfibre LNG's hiring priority for qualified Squamish Nation members and local workers first, followed by British Columbians and then other Canadians,” the statement added.

Chief Operating Officer of McDermott, Samik Mukherjee, said the Woodfibre award was an opportunity to further demonstrate the company’s LNG and modularization expertise.

In addition to the EPFC work, McDermott will also be responsible for commissioning and start-up services.

“Pre-installation work for the project is planned for early 2022 and will gradually ramp up to September 2023 when major construction is targeted to begin,” added Mukherjee.

Woodfibre LNG is expected to enter commercial service by the third quarter of 2027. 

The Rudong liquefied natural gas import terminal in the eastern Jiangsu Province of China and with LNG links to Canada is undergoing repairs after an accident and is not expected to be fully operational again until mid-November.

Woodfibre LNG, the small-scale Canadian export project planned for near Squamish in British Columbia, has been granted a permit by the provincial authorities to proceed with construction.

Pacific Oil & Gas, the Asian-based developer of the Canadian Woodfibre LNG export project in British Columbia, is buying Canbriam Energy, a producer of natural gas in the Montney Shale basin of northeast BC.

Pacific Oil & Gas is a subsidiary of the Royal Golden Eagle group of Indonesian businessman Sukanto Tanoto and whose headquarters are in Singapore.

The Asian and Canadian companies said the Canbriam transaction would create a well-capitalized entity able to grow from its current production of about 200 million cubic feet per day of natural gas, including 6,000 barrels per day of associated natural gas liquids.

The Woodfibre liquefaction and export plant is being built on the site of a former pulp mill at Squamish, north of Vancouver, and is licensed to export more than 2 million tonnes per annum of LNG.

The relatively small-scale Canadian LNG project is expected to start commercial operations by about 2023.

The PO&G purchase of Canbriam includes its natural gas processing plants and water-handling infrastructure to support natural gas pipeline transportation.

“Canada has the opportunity to become a leader in the global energy transition,” said Ratnesh Bedi, President of PO&G.

“Canbriam is one of the lowest cost producers in the Montney and we welcome the opportunity to work in Canada and produce some of the cleanest natural gas,” added Bedi.

Paul Myers, Canbriam’s President and Chief Executive, welcomed his company’s sale to such an experienced energy player.

“This transaction supports ongoing development of our prolific Montney assets and aligns us for future natural gas exports. We warmly welcome Pacific Oil & Gas as our new owner,” stated Myers.

The Woodfibre LNG project is one of the few moving forward on the Canadian West Coast where more than a dozen were previously planned.

Woodfibre owner PO&G also has LNG import assets in China. It holds a 35 percent stake in the Rudong LNG import terminal in China's eastern Jiangsu Province, with 55 percent held by Kunlun Energy, a Hong Kong-listed subsidiary of PetroChina.

PetroChina itself is an investor in the largest LNG export project moving forward in BC, the LNG Canada joint venture with 20 MTPA of initial output led by Royal Dutch Shell and with other stakeholders including Mitsubishi Corp. of Japan and Korea Gas Corp.

The closing of the Canbriam transaction is expected to occur before July 2019.

Macquarie Capital Markets Canada is the acting financial advisor to PO&G and Bennett Jones is acting as legal counsel.

RBC Capital Markets is the advisor to Canbriam and Norton Rose Fulbright Canada is giving legal counsel.

The Canadian Woodfibre LNG project proposed for the district of Squamish in British Columbia has reached final agreement with the Squamish First Nation, giving the native people benefits of more than C$225 million (US$170M) in cash over the planned 40 years of operations.

Canadian Woodfibre LNG President David Keane said the small-scale liquefaction and export venture proposed for the district of Squamish in British Columbia was expected to move to the construction phase in the first quarter of 2019.