Venture Global LNG Inc. has selected KBR Inc. to lead the first phase of construction for its Plaquemines liquefied natural gas (LNG) export project in a surprise announcement just months after KBR said it would exit the energy business.
Venture Global said as the engineering, procurement and construction (EPC) contractor KBR would “integrate highly modularized, owner-furnished equipment” for the 10 million metric tons/year (mmty) terminal proposed for Plaquemines Parish, LA.
“They recognize that our innovation of mid-scale, modular trains manufactured in a factory setting and delivered complete to site is revolutionizing this industry,” said Venture Global CEO Mike Sabel of KBR.
Venture Global is currently constructing the 10 mmty Calcasieu Pass LNG terminal in Cameron Parish, LA. The first two factory-fabricated liquefaction trains arrived at that site in early November. Kiewit Corp. is the EPC contractor for that project.
Sabel noted that KBR has designed a third of the liquefaction capacity worldwide. But over the summer, KBR said it would exit the energy business to focus on its technology and government solutions segments. Management said it was in the process of exiting all commoditized services, including EPC work on LNG projects given how volatile the space has become and its low margins.
Going forward, KBR said 80% of its work would be in government solutions and 20% in technology solutions. CEO Stuart Bradie said upheaval in the energy sector prompted the company to review its portfolio. It’s been a particularly difficult year for the oil and gas industry given the pandemic and its role in the global energy transition is also evolving.
KBR has a consulting business that is sharply focused on the energy transition as it relates to hydrogen, energy efficiency, recycling and other things, but management said on an earnings call in August that LNG in particular has become increasingly commoditized in recent years. The company has debooked LNG projects this year that have been cancelled or delayed given a global gas supply glut and lack of demand that worsened with the outbreak of Covid-19
Venture Global has pushed back the timeline for a final investment decision on Plaquemines from 2020 until mid-2021, but early site work is expected to start soon. The company had also previously said the terminal would have a nameplate capacity of up to 20 mmty. Polish state-owned natural gas company Polskie Górnictwo Naftowe i Gazownictwo SA, aka PGNiG and Électricité de France SA have signed binding 20-year agreements to take 3.5 mmty of LNG supplies from the terminal.
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