Virus spreads tentacles

Impact felt by only 2 British Columbia LNG projects, Alberta bitumen refinery

Gary Park

for Petroleum News

Of the only two LNG projects under construction in British Columbia, LNG Canada has slashed its construction workforce at the Kitimat terminal by 50% and Woodfibre LNG has delayed its completion date by a year, both of them attaching the blame largely to COVID-19.

The pandemic has also affected work to convert a refinery near Edmonton to switch from processing synthetic crude oil to raw bitumen feedstock.

In its latest report, Trans Mountain said there have been no delays to work on the C$12.6 billion expansion of its existing pipeline to ship 890,000 barrels per day of oil sands bitumen to a tanker terminal in the Port of Vancouver.

Chief Executive Officer Ian Anderson said in early March that construction would continue in British Columbia and Alberta, targeting an in-service date of December 2022.

Peter Zebedee, chief executive officer of LNG Canada, said the fallout from COVID-19 has forced the company to “gradually and methodically draw down” by 750 the work force at the C$40 billion terminal facility at Kitimat, with initial export capacity of 14 million metric tons a year.

‘Abundance of caution’

Coastal GasLink pipeline, which will deliver natural gas feedstock for liquefaction at Kitimat, has shrunk its workforce of 1,200 to 400 over the last month and plans to continue the ramp down.

Aside from COVID-19 the company said spring thaw will put an end to major construction, although some employees and contractors will be retained to perform environmental monitoring, pipe delivery and stockpiling, as well as some right-of-way site preparation. Pipe installation is still scheduled for the summer.

In northeast British Columbia, 60% of the 420-mile route was cleared by the end of February.

Woodfibre LNG, which had hoped to start exports of 2.1 million metric tons a year in 2024 from its terminal close to Vancouver, said substantial construction which was expected to start this summer will be stalled until mid-2021 after a fabrication yard in Asia was shut down to hinder the spread of coronavirus.

A spokeswoman said another delay was caused by Woodfibre’s preferred U.S. construction contractor for the marine port which filed for Chapter 11 bankruptcy protection in the United States.

The company has now applied to the B.C. Environmental Assessment Office for a five-year extension to its environmental certificate, which expires in October.

The spokeswoman said the company is meeting all of its “pre-construction commitments” and is delaying only the start of construction.

New COVID-19 guidelines

“We’re calling for remote-camp megaprojects to be tooled down to all but essential or critical-path work,” said Andrew Mercier, executive director of the B.C. Building Trades Council.

In Alberta, the virus has forced another delay on the Sturgeon refinery 30 miles northeast of Edmonton - a four-phase project to convert 240,000 bpd of bitumen blend feedstock into low-sulfur diesel and other products.

The refinery has been processing synthetic crude oil into diesel since November 2017, but hopes to advance its operations to raw bitumen, increasing the value of its output.

Multiple issues during the initial commissioning phase have pushed the estimated completion costs to C$9.9 billion from C$5.7 billion.

Since last June, the Alberta government - which is providing 75% of the bitumen feedstock through its petroleum marketing commission - has been making payments of C$27 million a month related to obligation to pay 75% of debt-servicing costs.

“It’s frustrating for us because we are paying (for a refinery that isn’t meeting its objective) at a time when we’ve got an economic downturn,” said Energy Minister Sonya Savage.

- GARY PARK