Page 10 - GLNG Week 12 2021

GLNG AMERICAS GLNG

Chevron stops funding for Kitimat LNG

INVESTMENT CHEVRON announced last week that it was was also continuing to work on improving Kit-
stopping directing funding to the proposed Kit- imat LNG’s cost-competitiveness. However, few
imat LNG project on the British Columbia coast other updates on the project have come recently,
in Western Canada. and Woodside had also previously said it was
The move follows an effort by the super-ma- seeking to sell part of its stake in Kitimat, though
jor to sell off its 50% stake in the Kitimat project, no buyer has emerged for either any of its interest
which it was engaged in since December 2019. or for Chevron’s.
Last week, Chevron noted that it had continued A Tudor, Pickering, Holt & Co. analyst, Matt
seeking a buyer, despite complications caused Murphy, commented that the decision by Chev-
by the coronavirus (COVID-19) pandemic, but ron to stop funding Kitimat LNG had come as no
had also carried on with certain work related to surprise given the super-major’s failed attempt to
the project alongside its joint venture partner, sell its stake in the venture.
Woodside Energy. This work included agreed “This is a portfolio-specific decision by Chev-
project activities that were anticipated to add ron to be pretty choosy about how they allocate
value to the asset or were required for regulatory capital,’’ he said. “There was ample opportu-
and operational compliance. nity for other parties to come in and take over
However, Chevron has now declared its intent the project and proceed with it. I think the fact
to cease funding any further feasibility work for no one did is just further support for industry
Kitimat LNG, on which a final investment deci- broadly being fairly choosy in how they’re allo-
sion (FID) has not yet been taken. cating capital.’’
Woodside, for its part, reiterated its commit- The 18mn tonne per year (tpy) Kitimat LNG
ment to the project, and said it was working with would use feedstock gas from the Liard and Horn
Chevron to “find a mutually acceptable solution River basins in north-east BC. This requires a
that enables the project to progress and Chevron 480-km gas pipeline to be built to the liquefac-
to exit”. The Australian company added that it tion plant, adding to its cost.™

Annova LNG scraps export terminal plan

PROJECTS & THE field of new LNG export terminal propos- announced for Annova LNG up to the point
COMPANIES als continues to thin in the US, with Annova when it was scrapped. Annova had previously
LNG scrapping its project in South Texas this said that it would sanction its $4.5bn export
week. plant once two-thirds of its capacity had been
In a March 22 statement, the company cited sold.
changes in the global LNG market as its rea- The project’s cancellation is the second on the
son for terminating the project, which was one US Gulf Coast in recent weeks, with NextDec-
of three proposed for the Port of Brownsville. ade announcing in January that it was dropping
Annova LNG said that while global supply had plans for Galveston Bay LNG, having deter-
Annova LNG was one of increased, demand had not. The company dis- mined that the proposed site for that project was
three export terminals continued work on the 6.5mn tonne per year not suitable for a liquefaction facility.
proposed for the Port (tpy) liquefaction with immediate effect, and However, NextDecade continues to move
of Brownsville in South said it was in the process of notifying commer- forward with plans for its Rio Grande LNG
Texas. cial partners and regulatory agencies. facility at Brownsville, saying it is working on
Utility Exelon is the majority owner in the remaining commercial agreements needed
Annova LNG, with Black & Veatch, Kiewit to achieve a final investment decision (FID) this
Energy Group and Enbridge holding minority year. The company is the only developer in the
stakes in the project. Exelon had tried to sell its Port of Brownsville to announce a firm offtake
stake in Annova, but had failed to attract a “suit- agreement to date, and is aiming to make an FID
able offer”. Cancelling the project was reported on two trains initially with a combined capacity
not to be Exelon’s first choice, but is expected to of 11mn tpy. It would then expand the facility to
better position the company’s power generation five trains and 27mn tpy.
business. The third LNG project proposed for the Port
The cancellation is no great surprise, given of Brownsville, Texas LNG, is targeting an FID
Exelon’s efforts to offload its stake, as well as this year or in 2022 on the first phase of a 4mn
the fact that no firm offtake deals had been tpy liquefaction plant.™

P10 www. NEWSBASE .com Week 12 26•March•2021