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COVID, Indigenous issues as LNG Canada resumes construction
Gary Park for Petroleum News
Thousands of workers are flooding into northern British Columbia to join a major push to complete the C$46 billion LNG Canada and Coastal GasLink project that is underpinned by a 420-mile natural gas pipeline and LNG liquefaction plant and export terminal at Kitimat.
By the end of March, the combined workforce is expected to reach 6,000, up six-fold from three months ago.
Whatever excitement there may be about the chances of bringing the project on stream is being offset by tensions around the risks posed by COVID-19 in the work camps, the threat of blockades and other protests by a group of hereditary Indigenous leaders and disputes over pipeline tolls and budget overruns on Coastal GasLink.
COVID-19 fears To head off fears of a pandemic outbreak at work sites, the LNG Canada consortium and TC Energy, which is building the pipeline, have rolled out mandatory COVID testing for all workers, whether they are symptomatic or not.
The partners are determined to prevent a repetition of four outbreaks that occurred at work sites between November and January when a total of 128 workers were infected, forcing the British Columbia government to impose stringent conditions.
To allay fears, company-funded rapid testing is ramping up for workers leaving for LNG Canada from six airports in British Columbia, Alberta and Ontario.
LNG Canada also announced that workers will be prohibited from leaving the job site except to return home on their days off and will be re-tested each time they return to the region.
The same standards are being imposed on 1,000 workers involved in the Trans Mountain bitumen crude pipeline from Alberta to the Vancouver area.
Higher tolls an issue Testiness surfaced in February between LNG Canada and TC Energy when the pipeline giant temporarily stopped work on Coast GasLink due to COVID-19 protocols and permit delays, warning the hitches would likely push costs over the C$6.6 billion budget, signaling that it also intends to negotiate higher tolls.
LNG Canada Chief Executive Officer Peter Zebedee said he was “disappointed” with TC Energy’s comments, but noted: “Like any relationship or friendship, sometimes you disagree on certain issues.”
The pipeline is designed to initially carry 2.1 billion cubic feet of gas to be liquefied at Kitimat, with the potential to eventually deliver 5 bcf per day.
Zebedee said higher tolls would only be acceptable if higher costs were incurred prudently. But he remains confident LNG shipments will start about 2025 at 360 million metric tons a year and double by 2040.
A raise in tolls would affect the economics of shipping LNG from Canada to Asia and would likely be resisted by the joint-venture partners - Shell Canada, Malaysia’s Petronas, PetroChina, Mitsubishi Canada and Korea Gas.
Indigenous talks Since First Nations shut down rail traffic through their territory in early 2020, talks between the hereditary Wet’suwet’en chiefs and the British Columbia and Canadian governments over land rights and title agreements have continued but have fallen behind schedule.
While the Wet’suwet’en leaders have pressed on with their opposition to Coastal GasLink, 20 other First Nations have signed agreements with LNG Canada, exacerbating rifts between the hereditary and elected chiefs in the region.
Karen Ogden-Towes, who is chief executive officer of the First Nations LNG Alliance, said the agreements with Coastal GasLink offer hope of improving procurement opportunities with Indigenous communities in addition to the C$875 million in existing contracts.
“We don’t just want the bare minimum,” she said.
How all these issues will shake out should be evident as the construction pace gathers momentum.
- GARY PARK
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