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Woodfibre LNG picks construction contractor

McDermott will be responsible for building the Squamish LNG facility; My Sea to Sky is critical of move and continues to doubt the viability of the project.
woodfibre lng
Conceptual rendering of the completed Woodfibre LNG plant. (via Woodfibre LNG)

Woodfibre LNG has signed a deal worth up to $2.5 billion with McDermott that will have the contractor build the liquefied natural gas export facility in Howe Sound.

On Nov. 23, officials behind the Squamish-area project announced it had inked an engineering, procurement, fabrication, and construction contract with the Houston-headquartered construction firm.

Woodfibre spokesperson Rebecca Scott said the LNG company chose McDermott because of its priorities in creating a low-emissions facility.

"One of the things that they bring to the table is a philosophy of low-emissions LNG construction, and that's our philosophy as well," said Scott.

"So when you're working with the engineers who are going to design the facility, you want to make sure you're aligned on what you want it to be like."

Scott also added that Woodfibre had no concerns about McDermott's recent emergence from Chapter 11 bankruptcy protection in the U.S.

In January 2020, McDermott filed for Chapter 11 bankruptcy protection.

"Facing enormous cost overruns at construction projects for two LNG plants, McDermott filed for a pre-packaged Chapter 11 bankruptcy in January, some two months before the onset of the coronavirus pandemic in the United States and the collapse of oil prices," reported the Houston Chronicle.

Reuters reported McDermott had been facing heavy debt after merging its business with Chicago Bridge and Iron Co. The deal was valued at about $6 billion, but also included $4 billion in debt.

However, after selling off its Lummus Technology business and the former pipe fabrication assets of the Shaw Group, both of which it inherited in the acquisition, McDermott was able to emerge from bankruptcy protection in June 2020, the Houston Business Journal said.

"We knew at the time that they would go through this process, and that they had quite a lot of business that was coming in," said Scott.

"We knew they would come out really strongly, and they did, and they made it through the process with flying colours, and they're in a great position to do the work. So we're not concerned at all."

Scott said McDermott would be prioritizing members of the Squamish Nation and local workers for the construction jobs.

Once the build-out is completed, Woodfibre will be in charge of hiring and operating the facility, which will offer 100 jobs.

Pre-installation work, which includes cleanup and remediation of the Woodfibre site, will occur during 2022, and construction on the actual facility is expected to start in September 2023, Scott said.

Woodfibre has an eye on completing its facility in 2027.

Scott said that the construction and completion dates have been pushed back before, but this has been a result of feedback from the community.

It takes a lengthy amount of time to make amendments to an environmental assessment certificate, and Woodfibre has made two amendments, she said.

The first amendment was to switch from seawater cooling to air cooling technology, which the community called for as a more environmentally-friendly alternative.

The second amendment was for the floatel to accommodate workers, which was proposed after community backlash against the idea of worker camps coming to Howe Sound.

Scott said that global LNG pricing has not contributed to delays in the project's construction.

"It takes four years to build this thing and then we operate for 40, right?," she said. "So, the prices of LNG yesterday and today or tomorrow, it's interesting, of course, to us — it's not like we don't watch it — but it's not really relevant to our decision to build."

On the other hand, environmental activist group My Sea to Sky said that shovels have still not hit the ground because the project is not financially viable.

Tracey Saxby, who heads the organization, was critical of the company's decision to sign a deal with McDermott.

"McDermott International filed for Chapter 11 bankruptcy in 2020 after "facing enormous cost overruns at construction projects for two LNG plants," said Saxby in a written statement.
"That seems like a risky choice for Woodfibre LNG, to select a company with a history of cost overruns building LNG plants for its engineering, procurement and construction contract."
She questioned Woodfibre's timeline for construction as well, saying that the amendment process for the floatel has stalled.
The International Energy Agency forecasts that natural gas demand will increase until 2025, but from there on it will remain flat until 2050, she noted.

The agency, she said, has also called on world governments to immediately stop investments in and approvals of oil and gas projects to ensure we limit warming to 1.5°C and achieve net-zero emissions by 2050.
"This last week, B.C. has been catapulted into its third state of emergency for 2021. After a summer of deadly heatwaves, drought, and wildfires, this fall, we've experienced catastrophic landslides that have shut down highways and floods that have displaced tens of thousands of people from their homes," said Saxby.
"We are living through the climate emergency right now. We cannot build new fossil fuel infrastructure like Woodfibre LNG that will lock in climate pollution for up to four decades."


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