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    LNG Canada remains concerned about CGL cost increase

Summary

TC Energy has not revealed new cost estimate for pipeline [Image credit: LNG Canada]

by: Dale Lunan

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LNG Canada remains concerned about CGL cost increase

The CEO of the Anglo-Dutch Shell-led LNG Canada consortium said July 28 the company “remains concerned” that TC Energy, whose Coastal GasLink unit is building the 670-km pipeline to the consortium’s liquefaction terminal at Kitimat, has proposed “significant increased cost estimates” for the project.

TC Energy has also said it will need more time to complete the pipeline, which at the end of June was estimated to be nearly 45% complete, according to a July construction update.

Carrying an estimated capital cost of C$6.2bn (US$4.9bn) when TC Energy took a final investment decision (FID) on the project in late 2018, the released cost for the pipeline has since increased to C$6.6bn. As yet, TC Energy has not provided a new cost estimate for the 2.1bn ft3/d pipeline.

“We have been working hard with TC Energy to understand the reasons for the increase in cost and schedule, and we have provided recommendations on improved execution efficiency,” LNG Canada CEO Peter Zebedee said. “We will continue to work with TC Energy and their partners to reach a commercial solution for how increased costs must be addressed in their original plans and how they can improve schedule performance.”

While dealing with the CGL cost and scheduling concerns, Zebedee said LNG Canada “has much to be proud about” as it moves into a period of peak construction.

At the end of May, more than 4,000 people were employed at the Kitimat worksite, and more than C$3.2bn worth of contracts and sub-contracts had been awarded to local, indigenous and BC companies.

“LNG Canada began with a bold vision: to work collaboratively with First Nations, local communities, non-governmental organizations, and local, provincial and federal levels of government and to set the benchmark for economically, environmentally and socially responsible LNG development in Canada,” Zebedee said. “We are confident we are meeting that vision.”

This past spring, LNG Canada completed the placement of more than 6,500 piles that will support the terminal’s first phase – 14mn mt/yr of liquefaction capacity – and in June it took delivery of the plant’s first major equipment, the first of two main cryogenic heat exchangers and the first two pre-coolers. Delivery and placement of those units marked the beginning of LNG Canada’s “going vertical” stage.

Later this summer, the 1,600-tonne roof of the 225,000 m3 phase 1 LNG storage tank [banner image] will be raised, Zebedee said, paving the way for inner tank work that will include three wall lifts and additional mechanical work.

Critical milestones have also been reached at LNG Canada’s Asian module fabrication sites, Zebedee said, and the first of the terminal’s hundreds of modules – the largest weighing about 10,000 tonnes – are expected to begin arriving in Kitimat in October.