Woodfibre LNG Pushes Back Construction Timeline

Woodfibre, B.C. (file image)

By The Maritime Executive 10-25-2017 02:26:01

Woodfibre LNG, a proposed natural gas export terminal on the coast of British Columbia, has pushed back its construction timeline due to a soft global market. It is the latest in a string of setbacks for West Coast LNG projects, which face growing competition in the Pacific Basin from new terminals in Australia, the U.S. Gulf Coast and Russia.

Woodfibre, which is funded by Indonesian investment firm RGE Group, originally intended to start construction this year. However, spokeswoman Jennifer Siddon told Reuters that the firm still has "some issues to resolve before we can say: 'we're in and this is actually happening on this timeline.'" Woodfibre has completed the FEED (front-end engineering and design) portion of the planning process, and still expects to enter into the next stage – engineering, procurement and construction – sometime next year. In the interim, Siddon said, the project's backers will seek government assistance in the form of tax breaks on electricity consumption and a reduction of import tariffs on steel components for the plant's construction. 

Dozens of competing LNG projects have been proposed along the BC coastline in recent years, but none have moved into construction, pushing back the prospects of an overseas export market for Canadian shale gas. The largest, Petronas's $36 billion Pacific NorthWest LNG plant in Port Edward, was canceled earlier this year. Petronas cited "changes in market conditions" in announcing the decision to suspend the proposal. Pricing on the benchmark Tokyo LNG spot index has hovered stubbornly in the range of $4 to $8 per mmbtu since 2015, well below the trading range when Pacific NorthWest LNG was launched; UK-based Cambridge Energy Associates estimated in 2015 that Canadian LNG terminals would require gas prices in the range of $10-$11 per mmbtu to become profitable. 

In addition to Woodfibre and other B.C.-based proposals, one Canadian-backed export facility is still moving forward, albeit outside of Canada's borders: Calgary-based midstream firm Veresen has resubmitted a regulatory proposal for an LNG plant at Coos Bay, Oregon, which would liquefy Canadian gas transported across the border by pipeline (along with gas from the western United States) for export to Asian markets.