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Fluor-JGC JV to design and build LNG Canada
2018/10/02
Fluor's 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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Source(s) GLNGI Staff, Shell, Fluor