Petronas delays decision on Pacific NorthWest LNG project

Banner dropped at International LNG in BC conference, May 21, 2013, by members of Rising Tide.

BRENT JANG, The Globe and Mail, Dec 3, 2014

Malaysia’s state-owned Petronas has delayed making a final investment decision on its Pacific NorthWest LNG project in British Columbia.

The Petronas-led joint venture’s terminal on Lelu Island in northwestern British Columbia is estimated to cost $11.4-billion, part of a $36-billion undertaking to export liquefied natural gas from the West Coast to energy-thirsty customers in Asia.

Pacific NorthWest LNG issued a statement Wednesday to warn that pipeline and terminal engineering costs are too high for the project.

Pacific NorthWest LNG project selected three global engineering contractors in May, 2013, to take part in a competitive process for the LNG project’s front-end engineering and design, or FEED.

The bidders are San Francisco-based Bechtel Group Inc., and two joint ventures – the KBR Inc. and JGC Corp. team and a group comprising Paris-based Technip, Samsung Engineering Co. Ltd. of South Korea and China Huanquiu Contracting & Engineering Corp.

The Technip-led group, calling themselves the West Coast LNG Partnership, even has a storefront in Prince Rupert on the same street as Pacific NorthWest LNG’s office in the northwest B.C. community.

KBR is based in Houston and JGC has its head office in Yokohama, Japan.

An estimated $3.4-billion of the project’s construction costs are to be spent in Canada, mostly in British Columbia, while the remaining $8-billion would be imported goods and services, according to regulatory filings.

The FEED process over the past 18 months had been slated to produce a winning bid as early as Sept. 30, but Petronas doesn’t like what it sees so far for costs to build a site that would produce 12.8 million tonnes annually of LNG, split into two “trains,” or the liquefaction stage that turns natural gas into a liquid through super-cooling.

http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/petronas-delays-decision-on-pacific-northwest-lng-project/article21923667/