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LNG Canada selects two finalists for contractor

02 Feb 2018 22:19 GMT
LNG Canada selects two finalists for contractor

Houston, 2 February (Argus) — The Shell-led LNG Canada export project has selected two engineering joint ventures as finalists to design and build the proposed facility in Kitimat, British Columbia (BC).

The ventures are a partnership of France's TechnipFMC and US firm KBR, and a partnership of Japan's JGC and US-based Fluor.

LNG Canada plans to select the contractor this year based on the most competitive proposal.

"While this is a significant milestone, work remains to be done to deliver a globally cost competitive project that is well positioned to take a final investment decision," said LNG Canada chief executive Andy Calitz.

LNG Canada has an estimated cost of C$25bn-C$40bn ($20bn-$36bn) for four liquefaction trains with combined peak capacity of 27.6mn t/yr, equivalent to 3.7 Bcf/d (105mn m³/d) of gas, and associated facilities. It is slated to be built in two phases with baseload capacity of 13mn t/yr each. The proposed 419-mile (675km) Coastal Gas Link pipeline to bring shale gas from northeastern BC is expected to cost an additional C$4.7bn.

The LNG Canada partners in July 2016 indefinitely delayed an investment decision because of the weak economics of exporting Canadian LNG in the current low-priced market. Shell in July said that LNG Canada is among two LNG projects for which it is considering making a positive investment decision this year. The other is the 15mn t/yr Lake Charles LNG export project in Louisiana, where Shell would have all the liquefaction capacity but not equity.

Shell is the largest holder of US liquefaction capacity, having 5.5mn t/yr of capacity at Louisiana's Sabine Pass facility and 2.5mn t/yr at Georgia's Elba Island LNG terminal, scheduled to come on line in mid-2018.

LNG Canada in December 2016 started the competitive bidding process to select two finalists to potentially be hired as the prime contractor.

Dozens of LNG export projects have been proposed in Canada because of the country's massive shale gas reserves in the western Canadian sedimentary basin, but only the mid-size $1.6bn Woodfibre LNG project in BC has made a positive investment decision. The Asia-focused project would have capacity of 2.1mn t/yr and would procure gas from the regional grid in the Vancouver area.

Rising oil prices could make Canadian projects more viable, as most long-term Asian LNG contracts are linked to oil prices. Many industry experts have said Canadian projects could move forward at oil prices of about $70/bl.