Chevron cuts off funding for Canadian LNG project : Chevron has announced that it will no longer invest additional funds into the Kitimat LNG project in British Columbia. The project is a 50-50 joint venture between Chevron Canada and Woodside Energy International.
In 2019, Chevron made the decision to not move forward with the project and sought to divest itself from Kitimat LNG. The company has not yet found a buyer for its share, however, and since making the decision to sell, it has been supporting activities related to Kitimat that will enhance the project’s value or keep it in line with regulatory requirements.
Chevron’s planned exit from the project, as well as its failure to sell, indicates that owner-operators in the space are becoming more selective as to where they allocate capital, analyst Matt Murphy of Tudor Pickering Holt & Co. told The Canadian Press. Murphy also said that the decision would not greatly impact natural gas producers nor hinder capacity.
In 2014, Chevron Canada and then-partner Apache Canada Ltd. awarded Fluor Corp. and its joint venture partner JGC the engineering, procurement and construction contract for the project, although Fluor acknowledged that the commencement of construction relied on final investment decisions. Despite Chevron’s recent announcement, the project has not been canceled and is slated to include:
- Two LNG reserves in the Liard and Horn River Basins in northeast B.C.
- The 293-mile Pacific Trail Pipeline.
- A natural gas liquefaction facility, which will include up to three LNG trains.
Meanwhile, despite a pandemic-related slowdown, Fluor and JGC are currently working on another natural gas facility in B.C., the LNG Canada project, which is estimated at $32 billion. That project includes a three-train plant, which Fluor’s JV is building, as well as a pipeline.
Several major LNG projects are in play in the U.S. as well. Houston-based Tellurian has still not made a final investment decision on its proposed $27 billion Driftwood LNG project near Lake Charles, Louisiana, according to Natural Gas Intelligence. Tellurian, like the rest of the LNG sector, has had to deal with a reduction in demand for natural gas, low prices and the disruptions caused by the COVID-19 pandemic during the last year. Tellurian awarded the $15.2 billion EPC contract for the project to Bechtel in 2017.
The pandemic has also delayed Freeport LNG’s plans to build a fourth train at its export plant in Texas. Freeport has put off a final investment decision until the middle of this year and won approval from the Federal Energy Regulatory Commission to extend completion by three years.
Chevron cuts off funding for Canadian LNG project
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