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KBR frontrunner to build Canada’s Woodfibre LNG

6 Dec 2017, 9.44 pm GMT

KBR frontrunner to build Canada's Woodfibre LNG

Houston, 6 December (Argus) — Western Canada's Woodfibre LNG project today named KBR as the likely builder of its planned export terminal near Vancouver, British Columbia (BC).

Woodfibre awarded Houston-based engineering firm KBR a contract to conduct final pre-construction engineering and design, as well as submit a bid for construction. KBR won a competitive process against Japanese engineering firm JGC, after Woodfibre in October 2016 contracted both companies to submit a detailed and engineering and design plan.

Woodfibre plans to sign a construction contract in mid-2018, meaning it could start exporting in mid-2020 to mid-2021, which would make it Canada's first major LNG export terminal. The anticipated construction period is two to three years, Woodfibre told Argus today.

The facility would be located at the site of a former pulp mill near Squamish, (BC), about 30 miles (48km) northwest of the Vancouver area. A number of proposed Canadian LNG export projects have been shelved or stalled because of low commodity prices and competition from cheaper US projects, but Woodfibre in November 2016 made a positive investment decision.

Woodfibre has been able to progress because of its smaller size and proposal to use gas from an existing grid. Most large western Canadian LNG projects would need to build multi-billion-dollar pipelines across mountainous terrain to bring stranded shale gas from northeastern BC and northwestern Alberta.

Woodfibre would have baseload capacity of 2.1mn t/yr, equivalent to 280mn cf/d (7.9mn m³/d) of gas. The planned terminal has an estimated cost of C$1.6bn ($1.3bn) and a proposed pipeline expansion to bring feed gas from the Vancouver grid is expected to cost an additional C$520mn.

Woodfibre is working with the BC and federal Canadian governments to address some competitiveness issue, including a Canadian tariff implemented in May on the importation of fabricated steel components.

"It's meant to help protect Canada's steel industry from foreign competitors, but in this case the Canadian steel industry is unable to manufacture to the scale of the modules required for LNG facilities," Woodfibre told Argus.

Woodfibre, wholly owned by Singapore-registered Pacific Oil and Gas, is focusing on selling to Asia, which would give it at least one competitive advantage over US Gulf coast projects by reducing shipping costs to that major market.

Woodfibre has not finalized any customer contracts. In May it reached a preliminary 25-year deal with China's Guangzhou Gas to sell 1mn t/yr. Pacific Oil and Gas is considering a number of options in marketing the project, such as selling only liquefaction capacity or selling free-on-board LNG under contracts of various durations.

Last month the Tilbury peakshaving LNG facility just south of Vancouver loaded what was likely the country's first waterborne LNG, a small volume equivalent to 107mn cf in a container that can be carried by ship, truck or rail. The standard LNG vessels that would load at Woodfibre likely would carry a gas equivalent of about 3-3.5 Bcf.

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