Page 11 - NorthAmOil Week 13

NorthAmOil PROJECTS & COMPANIES
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Woodfibre LNG construction delayed
BRITISH COLUMBIA
CONSTRUCTION on the planned Woodfibre LNG project in British Columbia, Canada has been delayed by a year, partly as a result of the coronavirus (COVID-19) pandemic. The delay comes as the global LNG industry braces for a global drop in demand for the super-chilled fuel, with countries locking down to various degrees in order to stem the spread of the pandemic.
CBC News cited a Woodfibre LNG spokes- person, Rebecca Scott, as saying this week that substantial construction, previously expected to start this summer, would not now take place until the second half of 2021. This comes after a fabrication yard in Asia that was making compo- nents for the project was shut down to hinder the spread of COVID-19.
Scott said that another cause for the delay to Woodfibre LNG was that the preferred US con- struction contractor for the marine part of the project had filed for bankruptcy protection and would therefore not be available to start work as planned.
The contractor is reported to have entered
bankruptcy protection in January, and the process is anticipated to last until July at the earliest, local media reported. Meanwhile, Woodfibre LNG is applying to the BC Environ- mental Assessment Office for a five-year exten- sion to its environmental certificate, which is due to expire in October.
“The key thing here is that we’re full steam ahead,” Scott said. “We’re still meeting all of our pre-construction commitments. Really nothing changes for us except our projection for start of construction.”
Once construction does begin, it is predicted to take about four years. The project will export 2.1mn tonnes per year (tpy) of LNG over a 40-year period. No cost estimate has been pro- vided for the facility.
News of the Woodfibre delay follows an announcement by the LNG Canada meg- aproject, also under development in BC, that it will reduce the size of its construction workforce by half in an effort to help local COVID-19 efforts.™
Shell quits Lake Charles LNG project
LOUISIANA
ROYAL Dutch Shell has announced that it is pulling out of the proposed Lake Charles LNG project in Louisiana, in which it partners Energy Transfer on a 50:50 basis. The super-major cited “current market conditions” as oil prices sink to 18-year lows and the coronavirus (COVID-19) pandemic exacerbates a global glut of LNG by weighing on demand.
Energy Transfer will carry on developing the project on its own, and Shell said in a March 30 statement that it would continue to support the midstream player with the ongoing bidding pro- cess for the engineering, procurement and con- struction (EPC) contract. After this, Shell will plan a phased handover of the project’s remain- ing activities.
“This decision is consistent with the initia- tives we announced last week to preserve cash and reinforce the resilience of our business,” said Shell’s director of integrated gas and new energies, Maarten Wetselaar, in the statement. “Whilst we continue to believe in the long-term viability and advantages of the project, the time is not right for Shell to invest.”
The measures announced last week that Wetselaar referred to include reducing capital expenditure for 2020 from a planned $25bn to $20bn or less. It comes as no surprise that Shell is re-evaluating the projects it participates in as it adapts to a new collapse in crude prices.
Shell inherited the stake in Lake Charles LNG when it took over BG Group in 2016. The
project seeks to convert Energy Transfer’s exist- ing import terminal in Lake Charles to a lique- faction and export facility. The terminal would have a liquefaction capacity of 16.45mn tonnes per year (tpy).
The project had already been encountering challenges before the COVID-19 pandemic rocked the already glutted LNG market. In November 2019, Shell asked US regulators to extend the time to complete the project to 2025 owing to a weaker outlook for LNG prices.
Other LNG projects that have yet to reach the final investment decision (FID) stage are antici- pated to face delays as a result of current market conditions and social distancing measures being implemented globally to combat COVID-19. In mid-March, the workforce at the site for the Shell-led LNG Canada project was temporarily reduced by 50%.™
The Lake Charles LNG project seeks to convert Energy Transfer’s existing import terminal in Louisiana to a liquefaction and export facility.
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