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LNG Canada Awards Export Project Construction Contract; FID Looms

Hope rose Friday for the long-awaited start of liquefied natural gas (LNG) exports from the northern Pacific coast of British Columbia (BC), when the LNG Canada project announced its choice of contractors to engineer and build a terminal.

The selection of Fluor Corp. and JGC Corp. for the estimated C$14 billion (US$11 billion) construction project is “an important announcement,” said the consortium led by Royal Dutch Shell plc with Asian partners Korea Gas Corp., PetroChina Corp. and Mitsubishi Corp.

But the recruitment of work candidates remains only a preliminary step. “This contract award is conditional on the project partners making a final investment decision,” or FID, added LNG Canada.

No target date was disclosed for the construction decision or the FID. The BC government has given LNG Canada until November to accept a March offer of a forecast C$6 billion (US$4.8 billion) in provincial sales, income and carbon tax cuts as incentives to build the terminal. Talks continue with the federal government on a request for exemptions from import duties on Asian-made industrial hardware.

Shell executives remained noncommittal about the BC project when questioned during the first quarter conference call, saying only that the Canadian proposal is one entry in an international portfolio of opportunities.

In a quarterly report Friday, TransCanada Corp. repeated that the cross-BC gas pipeline proposed to supply the LNG Canada terminal, Coastal GasLink, remains live but also set no decision or construction target dates.

Last fall, the LNG Canada project received an extra five-year lease on life. The National Energy Board granted a reprieve, until 2027, from the 2022 deadline set by the original export license for exports to begin.

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