Project Spotlight: Woodfibre LNG [Gas in Transition]
Back in 2019, Woodfibre LNG looked well placed to follow LNG Canada in becoming Canada’s second LNG export facility to see a positive financial investment decision. Not only that, but with an expected shorter construction schedule, it could have been the first into production.
That is not how events turned out, but following a three-year hiatus, the project now appears firmly back on track, albeit with a longer construction timetable.
A final piece of the jigsaw fell into place in November with the completion by Canadian midstream company Enbridge of the acquisition of a 30% interest in the 2.1mn mt/yr project for $1.5bn. Pacific Energy (formerly Pacific Oil & Gas, or PO&G), a privately-held company owned by Singapore’s Royal Golden Eagle group of companies, sees its stake in the $5.1bn project reduced to 70%.
The deal with Enbridge, announced in July, followed issuance of a Notice to Proceed in April by Pacific Energy to its construction contractor McDermott International. Major construction work is scheduled to begin in 2023 with the aim of seeing the first LNG cargo leave Woodfibre LNG sometime in 2027. The Covid-19 pandemic and reorganisation of McDermott, following a bankruptcy filing at the beginning of 2020, were both major factors delaying the project.
Backing Woodfibre LNG is UK oil and gas major BP as a foundation buyer. In June 2019, PO&G announced a binding sales and purchase agreement (SPA) with BP for 0.75mn mt/yr of LNG over 15 years on a free-on-board basis, with a then expected start date of 2023. Last year, a second SPA was announced for a further 0.75mn mt/yr of LNG over 15 years, this time with a start date of 2025.
If, as now looks likely, major construction does start next year, BP will have to wait a little longer still to receive its first cargo in 2027.
Greenhouse gas emissions profile
A key part of BP’s attraction for the Woodfibre project is its focus on low emissions LNG production. Woodfibre will use electric motor drives for gas compression and will source the electricity for those drives and other plant operations from Canadian electric utility BC Hydro.
BC Hydro plans to upgrade an existing 138 kV transmission line located between the Gibsons and Cheekye substations and connect the Woodfibre LNG facility to the existing 500 kV transmission line which runs adjacent to the site. A new switching station will also be built on site.
The use of renewable electricity to power the plant is expected to give Woodfibre LNG one the lowest greenhouse gas emission profiles globally for an LNG plant.
LNG plant emissions come from five primary sources, the largest of which is stationary combustion and flaring, followed by fugitive losses, venting, emissions from imported energy and mobile combustion. The emissions from imported energy account for about 8% of Woodfibre’s total expected emissions and reflect the carbon profile of BC Hydro’s electricity supply.
This is highly dependent on hydropower, but also includes thermal power plants located at Prince Rupert and Fort Nelson, as well as supply from independent power producers. As BC Hydro works towards full decarbonisation, Woodfibre LNG can expect its imported energy emissions to fall, further improving its own emissions profile.
Based on third-party validation, Woodfibre estimates that the carbon intensity of its LNG exports will be less than 0.05 tons of CO2-equivalent per ton of LNG, significantly below the British Columbia (BC) government’s benchmark of 0.16 mt/CO2e.
BP itself, meanwhile, has undergone something of a conversion since the appointment of a new CEO, Bernard Looney, in 2020. One of his first initiatives was to commit the company to reaching net zero emissions by 2050 or sooner and to halve the carbon intensity of the products it sells by the same date. The commitment needs to be backed by projects which align with that aim and Woodfibre LNG appears to fit the bill -- as well as being located in a politically and economically stable country, one with Pacific Ocean access to Asian LNG markets.
Woodfibre LNG will be built on an industrially-zoned site with a deep water port on the Howe Sound on Canada’s western coast. The site formerly housed a pulp mill that closed in 2006. Woodfibre officially became the owner in 2015, following an extensive clean-up of contaminated sediment, wood chips, equipment and creosote panels left by the pulp mill operations.
The project, located in the traditional Squamish village of Swiyat on unceded Squamish Nation lands, is expected to create up to 650 construction jobs and about 100 full-time operational jobs. The project is fully permitted, including a first-of-its-kind environmental approval from the Squamish First Nation.
Woodfibre LNG will have 250,000 m3 of floating storage capacity, reflecting land space restrictions and land quality on the onshore site.
Feedstock source and transmission
Upstream, Woodfibre is banking on the prolific Montney shale, which spans parts of BC and Alberta, as the source of its feedstock. In 2019, PO&G completed the purchase of Canbriam Energy, later rebranding it Pacific Canbriam Energy. Pacific Canbriam owns and operates gas production facilities on the Montney shale, including the 210mn ft3/d gas processing facility at Altares.
The plant site is designed ultimately to house processing capacity of 400mn ft3/d and is currently being expanded by 120mn ft3/d. In August, the company announced the acquisition of 47,025 net acres of new Montney land rights in the Altares, Attachie and Portage areas of northeast BC. This increases the company’s acreage by 26% to 224,805 acres.
Emissions reductions are also a focus of the upstream operations.
Pacific Canbriam is engaged in the trade of Methane Performance Certificates, which allow a seller to sell certificates for zero methane emissions natural gas production. These certificates use a protocol developed by S&P Global Platts, which demands that natural gas is produced below a threshold of 0.1% methane emissions intensity to qualify.
Feedstock for the LNG plant will be supplied by the Eagle Mountain-Woodfibre gas pipeline project, which involves 50 km of new gas pipeline running predominantly along the path of the existing Fortis BC pipeline between Coquitlam and Woodfibre near Squamish. The existing pipeline was built in 1990 and serves Squamish, the Sunshine Coast and Vancouver Island.
There will be two new compressor stations, one on the Woodfibre site and the other at the existing Eagle Mountain compressor station in Coquitlam. The project requires 3.8 km of new pipeline to be laid about 25 metres below the estuary bed of the 673-hectare Skwelwil’em Squamish Estuary Wildlife Management Area. This will be achieved by building a tunnel under the estuary, which will then continue under the Monmouth Mountain for a further 5.2 km to reach the Woodfibre LNG site.