Kitimat in line to be first Canadian LNG exports start-up

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Kitimat LNG – the first project to secure an approval from the National Energy Board (NEB) to export LNG from the western Canadian province of British Columbia (BC) – has chalked up another first. In mid-January the project partners, Apache and Chevron, announced they had awarded an engineering, procurement and construction (EPC) contract to a consortium of Fluor and JGC. BC premier Christy Clark described the news an “another strong sign of LNG projects advancing in BC”.

Kitimat LNG won its 20-year export licence in October 2011. It was followed in February 2012 by the Douglas Channel Energy Project and in February 2013 by the Shell-led LNG Canada project.

Seven export licences granted: The number of BC LNG export licences leapt to seven in December when the NEB granted four more to: BG Group’s Prince Rupert LNG Exports; Pacific NorthWest LNG, proposed by Petronas/Progress Energy; WCC LNG, representing Imperial Oil and ExxonMobil Canada; and Woodfibre LNG Export, proposed by Woodfibre Natural Gas. These licences remain subject to approval by the Canadian government.

The list of proposed LNG exports in Canada continues to grow, though as yet none of the projects has taken a final investment decision (FID). The NEB is currently considering another three export licence applications, and yet more companies are proposing potential export projects.

The latest to do so is Australia’s Woodside, which has just reached a sole proponent agreement with the BC government giving it the exclusive right to pursue land tenure in the Grassy Point area. The agreement obliges Woodside to obtain an export licence from the NEB within a year and to submit a “project description” to the Canadian and BC governments to initiate the environmental assessment process.

FID in 2014? Kitimat LNG already has an environmental assessment from the BC government and the project partners, who each hold a 50% interest in the project, are hoping to reach a positive FID later this year. The scope of the EPC contract awarded to Fluor/JGC by Kitimat includes completion of the existing front-end engineering design (FEED) package and  detailed engineering and procurement services for the initial phases of the project. The work will be conducted in North America and Asia Pacific offices of the consortium members.

Peter Oosterveer, president of Fluor’s Energy & Chemicals Group, said: “Kitimat has the potential to become Canada’s first major LNG production and export terminal. Our strategic relationship with JGC was a key to winning this project and is certainly proving to be a differentiator in our markets.”

Apache and Chevron are initially proposing a 5 mtpa plant that could later be expanded to 10mtpa; the NEB export licence is for 10 mtpa. Feed gas will come from Apache’s Horn River and Liard fields in British Columbia.

Gas would be transported along a proposed 463 kilometre pipeline, called the Pacific Train Pipeline Project. In February 2013 the company developing the pipeline, Pacific Trains Pipelines LP, signed a commercial agreement with the BC government and 15 First Nations governing the benefits that the First Nations will receive from the project.

Target markets in Asia Pacific, such as Japan, South Korea and China, are relatively close to where the project will be located, on Canada’s western coast.

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