Pacific NorthWest LNG is one of 20 proposed LNG projects in B.C. which will see a $36 billion LNG export facility built on Lelu Island in the District of Port Edward. The project is one step closer to a final decision that would see the proposed facility liquefy and export natural gas produced by Progress Energy Canada in northeastern B.C.
Tess Gill, head of corporate and stakeholder relations for Pacific NorthWest LNG, provided an update on the status of the Pacific NorthWest LNG project at a session hosted by the BC Construction Roundtable. She began by sharing some general insights on the LNG industry before discussing what would be involved for construction of the Pacific NorthWest LNG project and the next steps should the project receive regulatory approval from the Government of Canada.
Despite current oil prices, the prospect of a LNG export industry is still an opportunity for B.C. and Canada, she said, but the “industry faces some real challenges.”
“Current local and global oil prices have changed how every major company is looking at capital expenditure,” said Gill, noting competitiveness is a major factor.
West Coast Canadian projects will be competing with U.S. LNG projects for a share of the global market. The U.S. has reduced start up costs and expedited timelines compared to B.C., she said. “But the good news is B.C. has the advantage for proposed export facilities being closer to the Asian markets.”
Success factors for LNG projects include gas supply, customers, experienced LNG global partners and financial capacity. There are numerous proposed LNG projects in B.C. but not all will proceed, she said.
The Pacific NorthWest LNG project has grown significantly in the past three years, according to Gill, and all the components are in place despite significant regulatory delays. The consortium of companies behind the megaproject, led by Malaysia’s state-owned Petronas, is waiting for final regulatory approval from the federal government.
One of those components is the 900 km Prince Rupert Gas Transmission project, which will deliver the natural gas to the facility. It is “shovel ready” and waiting for the Pacific NorthWest LNG project to move into the construction phase.
The first phase of the LNG project would include two LNG trains, a bridge from Port Edward and major marine infrastructure. Two LNG storage tanks (requiring 17,000 cubic metres of concrete per tank) also part of initial development would take three years to complete. At peak, a workforce of 5,000 is expected.
“Given the size and scale of the project, the workforce will need to be mobile and flexible,” said Gill, explaining a EPCC contractor will be selected through a competitive bid process to engineer, procure, construct and commission the facility. The project will use a lump sum contract which will provide a greater certainty that the project will be delivered on time and on budget.
Gill stressed all participants will need to fully understand the contractual obligations because “projects of this size and complexity present a number of risks to shareholders, financiers and customers.”
She encouraged the industry to get involved early, look for opportunities on the projects website (pacificnorthwestlng.com) and to register on the supply portal (LNGBuyBC.Force.com). Other tips cited were to be competitive in bidding; understand capacity constraints; and ensure products or services is right for the work.
And most importantly, be patient, she said. Once approval is received, the partners will make a final investment decision, then an EPCC contractor will be selected and permits obtained for site clearing.
Cheryl Mah is managing editor of Construction Business.