LNG Canada has selected an engineering joint venture based in the United States and Japan as the prime contractor for the Shell-led project that is hoping to export liquefied natural gas from British Columbia.
Fluor Corp. of Irving, Tex., and JGC Corp., based in Yokohama, Japan, said on Friday that their joint venture won the contract for what the industry calls engineering, procurement and construction (EPC), including plans to build an export terminal in Kitimat in northwest British Columbia.
The naming of the prime contractor is the latest step forward taken by LNG Canada, which is expected to make a final investment decision by the end of 2018 on whether to proceed to the first phase of construction.
LNG Canada has estimated that it will cost up to $40-billion to construct the B.C. terminal and complete various infrastructure, including TransCanada Corp.’s proposed $4.7-billion Coastal GasLink pipeline from northeastern British Columbia to Kitimat.
Fluor said in a release that the B.C. LNG project is well-positioned to be globally competitive. “We look forward to building on the strong relationships that LNG Canada has established with the local community. Our team is committed to developing this facility safely, sustainably and with lasting benefits for the local community and British Columbia,” said Jim Brittain, group president of Fluor’s energy and chemicals business.
Royal Dutch Shell PLC holds 50 per cent of LNG Canada. South Korea’s Kogas and Japan’s Mitsubishi Corp. each have a 15-per-cent stake, while Beijing-based PetroChina Co. Ltd. owns a 20-per-cent interest in the LNG consortium.
The Fluor-JGC group edged out the team of TechnipFMC and KBR Inc. for the EPC contract. Two other groups had been in the running to serve as LNG Canada’s prime contractor: Bechtel Canada Co. and Chiyoda Canada Ltd.; and Saipem SpA and Chicago Bridge & Iron Co. BV.
Phase 1 in Kitimat will have two “trains,” or separate LNG cooling processes, which turn the gas into a liquid for eventual export. Each train is being designed to handle 6.5 million tonnes a year of LNG exports to Asia, for a total of 13 million tonnes annually in the first phase.
“The joint venture of JGC and Fluor has significant experience in Canada, combined with extensive LNG and megaproject experience,” Susannah Pierce, LNG Canada’s director of external relations, said in a statement from Vancouver. “Fluor has nearly 70 years of Canadian project experience with over 7,500 construction personnel working on Canadian projects in 2017, while JGC has experience in construction of more than 48 LNG trains globally.”
LNG Canada has asked the federal Finance Department to exempt the B.C. project from anti-dumping duties of up to 45.8 per cent on imports of fabricated industrial steel components, notably from China and South Korea. The Shell-led group wants supplies from China, saying it cannot afford to wait years to see whether Canadian steel fabricators can create a domestic industry in the Vancouver region to help construct large LNG modules.
The awarding of the EPC contract on Friday forms a large part of the total costs being forecast. “The award is conditional on a positive final investment decision later this year, at which point Fluor will book its share of the contract value,” Fluor said.
LNG Canada is taking legal action in the Federal Court of Appeal, in addition to asking the Finance Department for duty exemptions. Ms. Pierce expects the appeal court to rule in mid-September on applications for tariff relief filed by LNG Canada, oil and gas producer Suncor Energy Inc. and the Canadian unit of Fluor.
On the pipeline side, TransCanada said it is making progress. “The project team has been working with aboriginal and local communities along the Coastal GasLink route for more than five years,” a TransCanada spokeswoman said in an e-mail. “The overall consultation process undertaken by the project team has helped us reach over 80 per cent of our project agreements to date and is a reflection of the importance TransCanada places on working closely with aboriginal groups.”