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Petronas gets green light for Canada Pacific Northwest LNG project

BC approved Lelu Island LNG trains and PRGT pipeline

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolBritish Columbia Province Authorities have approved Petronas Pacific Northwest liquefied natural gas (PNW LNG) export terminal project and its related TransCanada Prince Rupert Gas Transmission (PRGT) pipeline project on the Canada west coast.

The joint venture Progress Energy Canada Ltd (Progress Energy) and its stakeholders, the national oil company (NOC) PetronasJapan Petroleum and Exploration Corporation Ltd (Japex), Indian Oil Corporation Ltd (Indian Oil) and Petroleum Brunei made a major step forward for the construction of one of the largest LNG export terminal project to be built on the Lelu Island, near Prince Rupert in BC.

Petronas_Progress_Pacific_Northwestern_LNG_Competitive_FEED_project-mapIn 2013, Petronas, Japex and Petroleum Brunei acquired the Calgary-based Progress Energy.

In 2014, Petronas sold 15% to China Petroleum & Chemical Corporation (Sinopec) and 10% of its stakes to Indian Oil so that currently the working interests in Progress Energy are shared as following:

 – Petronas 62% is the operator

 – Sinopec 15%

 – Japex 10%

 – Indian Oil 10%

 – Petroleum Brunei 3%

In order to supply this Pacific Northwest LNG project with natural gas, Progress Energy and its partners in the North Montney joint venture (NMJV) explored and developed natural gas reserves in the Northeast of British Columbia, along  the Province of Alberta.

At the end of 2013, Petronas and its NMJV partners declared to have accumulated 8.35 trillion cubic feet (tcf) of proven and probable (2P) reserves of natural gas between the Montney Basin in BC, the Deep Basin and the Foothills in Alberta.

In addition, Petronas and its NMJV partners are targeting to delineate 65 percent of 24.7 tcf contingent resources.

Petronas to revise Pacific Northwest LNG project costs

With these shale gas reserves in development in Alberta and British Columbia, Petronas is planning to build the Pacific Northwest LNG export terminal project in two phases.

 The PNW LNG Phase-1 project should include:

Petronas_Lelu_Island_British-Columbia_LNG_Project – Utilities and power generation 

 – LNG Trains 1 and 2

 – Gas Inlet system

 – Gas Treatment facilities

 – Offsites

 – Storage and offloading facilities

 – Marine and jetty 

Then in a second phase Petronas would add the Pacific Northwest LNG train 3.

Each LNG train should have a capacity of 6 million tonnes per year of LNG.

In May  2013, Petronas and its partners selected three teams of engineering companies to organize a competitive front end engineering and design (FEED) in order to be proposed the most cost effective engineering, procurement and construction (EPC) contract for PNW LNG Phase-1 project.

The costs estimates returned by the engineering companies in competitive FEED for Pacific Northwest LNG Phase-1 project are significantly above the budgeted $11.4 billion capital expenditure leading Petronas  and its partners to revise costs.

As a consequence Petronas and its PNW LNG partners Japex, Petroleum Brunei and Indian Oil will postponed the final investment decision (FID) for Pacific Northwest LNG Phase-1 project EPC contract from the end of 2014 to mid 2015 as they still target the first LNG shipment from Lelu Island in British Columbia by 2019. 

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