Pieridae Energy readies to seize opportunity in global LNG market
Kallanish Energy June 12, 2020
Canada’s Pieridae Energy said on Thursday it’s fully committed to its Goldboro LNG project in Nova Scotia, despite a delay on its final investment decision (FID) due to restrictions driven by the Covid-19 pandemic.
FID on the liquefaction project was delayed to June 30, 2021 due to Covid-19 and its engineering, procurement, and construction (EPC) contractor KBR not being able to press forward with pricing elements of its open book estimate because businesses were shut.
KBR couldn’t “access such things as modular yards in China and Europe, so the delay was a function of the pandemic, nothing more,” James Millar, director of external relations told Kallanish Energy in an interview.
Analysts believe North American LNG projects will continue to struggle as the Covid-19 crisis not only affects the projects’ logistics but is also affecting LNG demand and prices. There’s currently an overhang in LNG capacity, challenging the economics of LNG exporters and some global LNG projects are either being canceled or delayed.
The case for Goldboro LNG is different though, claims Millar. “Now is the time for Canada to seize the opportunity to enter this industry at a time when others are exiting. Our Goldboro LNG project is sound and supports the fundamental principles of First Nations reconciliation,” he said.
The project is set to open up new energy trade routes to get Canadian natural gas to global markets, taking advantage of its short shipping distance to key importing markets. Goldboro is half the distance to Europe, and closer to South America and South Asia (via the Suez Canal) compared to ships coming from the U.S. Gulf Coast and Qatar.
A shipment from the planned two-train facility, on the northeast coast of Canada, would take five shipping days to arrive at the UK’s Dragon LNG terminal. In comparison, a cargo would take 10.9 days to make the same journey from the Gulf Coast, and 14.5 days from Qatar.
The 10-million-tonne-per-annum (Mtpa) project is set to start commercial operations in 2025/26. The entire capacity of its first train has been sold to Germany’s Uniper under a 20-year supply and purchase contract. The deal is backed by an up to $4.5 billion loan guarantee from the German government, agreed in principle.
With all major permits in place, Pieridae said it continues to advance elements of the project even during the pandemic. It’s focused on progressing work with KBR to deliver a fixed-price contract to build the gas liquefaction facility. Finishing this work will allow Pieridae to complete final due diligence and proceed with project financing.
“We have begun to contract for services outside the primary engineering, procurement, construction and commissioning contract with the intent to begin the site preparation work as soon as possible,” said Millar. “Some of these main activities include building the wharf and jetty, road reconstruction, and constructing the work camp.”
A preliminary estimate on the cost of pre-site construction is expected by month-end, while the open book estimate from KBR is slated to be completed by year-end. Some construction works could start in the fall of 2020.