Woodfibre LNG in starting blocks
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Sales contract puts privately owned company on verge of construction of small operation on Squamish Nation land near Vancouver
Gary Park for Petroleum News
Amid the fading fortunes of more than 20 proposed LNG projects, the smallest and largest of the pack keep plodding on, with the privately owned Woodfibre LNG insisting it is now on track to start construction this year.
The Vancouver-based subsidiary of Singapore’s Pacific Energy Corp. ended 2021 by signing an engineering, procurement and construction contract with Houston-based McDermott International to build liquefaction and export facility near Squamish, British Columbia, just north of Vancouver.
That followed the mid-year announcement of a sales contract with BP Gas Marketing, that would account for 750,000 metric tons a year or 70% of future production from the plant.
The 15-year pact is a vital advance for the C$1.8 billion venture, leaving Woodfibre to find only sales outlets for the remaining 30% of the project’s annual capacity.
But a spokeswoman for the proponent said the company does not require contracts with buyers to start construction, which is expected to stretch over four years.
Would be 2nd Canadian project If Woodfibre does issue notice (the equivalent of a final investment decision) of its intention to proceed, it will be just the second LNG proposal to start construction in Canada, trailing the massive C$40 billion Shell-operated LNG Canada undertaking, that is well advanced, but continues to tangle with Indigenous protesters along its Coastal GasLink pipeline from natural gas plays in northeastern British Columbia to the planned terminal at Kitimat.
Woodfibre’s export facility is designed to start shipments at 2.1 billion cubic feet day, with the potential to deliver 5 bcf per day.
“Our contract with McDermott is a positive step forward for this substantial piece of clean energy infrastructure,” said newly appointed Woodfibre LNG President Christine Kennedy.
“Together, we will be building the lowest-emission, most sustainable and innovative LNG export facility in the world.”
The Woodfibre release shows McDermott plans to start work in early this year, reach a “major construction” peak by 600 workers in September 2023 and finish the job in the third quarter of 2027.
The sales contract demonstrates “how our LNG and modularization expertise enables a new generation of sustainable energy solutions,” said Samik Mukherjee, chief operation officer of McDermott.
The contractor has developed what it calls a “Net Zero Modular LNG strategy” with the goal of cutting emissions at Woodfibre.
Electric-fired train David Keane, former president of Woodfibre and now a strategic advisor to the project, said that by sourcing its electricity needs from provincially owned BC Hydro and using an electric, rather than gas-fired train to liquefy the gas, the facility will limit its emissions to 68,000 metric tons of carbon dioxide a year, Keane said.
He told the Financial Post that “it’s getting hard to see how you can further reduce emissions.”
Keane said Woodfibre’s CO2 emissions would have lower intensity than any project shipping LNG off the U.S. Gulf Coast.
The facility will be built on Squamish Nation land that was a pulp and paper operation for almost 100 years. The Indigenous community has been involved from the outset in approving the project site, subject to 25 conditions as part of a benefits agreement.
Keane said Woodfibre “entered into a completely different way of consulting with and accommodating First Nations in terms of developing our benefits agreement,” avoiding the substantial opposition that has scuttled several Canadian energy projects in recent years.
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