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Fluor-JGC JV to design and build LNG Canada (LU: 9-10-2018)
Fluor joint venture with JGC will provide the engineering, procurement, fabrication and construction on the LNG Canada project.
Fluor announced that LNG Canada has made the final investment decision to build its LNG export facility in Kitimat, British Columbia and its joint venture with JGC will provide the engineering, procurement, fabrication and construction on the project.
“Fluor will book its $8.4 billion share of the about $14 billion contract value in the fourth quarter of 2018,” the US-based firm said, adding that “we are committed to closely collaborating with LNG Canada and the local community to deliver this project safely and sustainably and to meet client needs.”
The LNG Canada project scope will initially consist of two liquefaction trains for a total of approximately 14 MMT/Y of LNG, with the potential to expand to four trains in the future. “More than 4,500 workers will be employed at the peak of construction.”
Fluor said that the joint venture will begin site activities this year, with first LNG expected around the middle of next decade when the market analysts see an LNG supply shortage in their outlook.
LNG Canada is a joint venture comprised of Shell (operator - 40%), Petronas (25%), PetroChina (15%), Mitsubishi (15%) and Kogas (5%).
Concurrently, the project's operator Shell announced that the LNG Canada project's construction will start immediately with first LNG expected before the middle of the next decade.
Shell has remarked that its “40% share of the project's capital cost is within the company's current overall capital investment guidance of US$25-$30 billion per year” as “LNG Canada is expected to deliver Shell an integrated internal rate of return of some 13%, while the cash flow it generates is expected to be significant, long life and resilient.”
“Supplying natural gas over the coming decades will be critical as the world transitions to a lower carbon energy system. Global LNG demand is expected to double by 2035 compared with today, with much of this growth coming from Asia where gas displaces coal, Shell has reminded in its statement.
LNG Canada is advantaged by access to abundant, low-cost natural gas from British Columbia's vast resources and the relatively short shipping distance to North Asia, which is about 50% shorter than from the US Gulf of Mexico and avoids the Panama Canal. “The project has been designed to achieve the lowest carbon intensity of any LNG project in operation today, aided by the partial use of hydropower.”
Earlier, PetroChina had said that its board of directors approved its $3.46 billion share of the LNG Canada project, implies a total investment of roughly $23 billion.
Meanwhile, Bloomberg has predicted that booming global LNG demand growth means that 11 projects, including LNG Canada, are likely to receive final investment decisions by the end of 2019 after several years of no FID.
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On 2 Oct. 2018, TransCanada announced today that it will proceed with construction of the Coastal GasLink pipeline project to serve LNG Canada project. Coastal GasLink is a 670-Km pipeline designed to transport natural gas from the Montney gas-producing region near Dawson Creek, B.C. to the LNG Canada facility in Kitimat. The pipeline will have an initial capacity of approximately 2.1 BCF/D with the potential for expansion of up to approximately 5 BCF/D. “Construction activities are expected to begin in early 2019 with a planned in-service date in 2023.”
On 2 Oct. 2018, Boskalis announces that it will be executing the dredging works for the LNG Canada project under a €100 million contract. The dredging scope includes the removal and remediation of contaminated and non-contaminated sediments at the site of the future facility. “The dredging activities are expected to continue into 2020.”
09 Oct 2018, Shell CEO Ben van Beurden said that he is confident that the LNG Canada project will remain competitive on a capital spending and production cost basis, due to intensive work to bring down construction costs. The use of modular construction methods, standard industry equipment and the fact that Canada will be built on a brownfield site mean the cost will come in at a "competitive" $1,000/MY/Y, van Beurden added.
"We have spent more time on Canada LNG than other projects in terms of de-risking it. If you just look back over the last 4-5 years, the track record we have on delivering projects on budget and ahead of schedule is quite compelling." Canada LNG is expected to come on stream in the mid-2020s and will allow LNG from the project to reach Tokyo in half the time of a cargo from the Gulf of Mexico, he said.
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Source(s) GLNGI Staff, Shell, Fluor, BCO&G