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07 May 2021 | 21:21 UTC
By Troy Duffie
Highlights
BP subsidiary doubles its offtake with fresh SPA
Proposed facility will run on hydroelectric power
Woodfibre LNG has signed a second sales and purchase agreement with BP Gas Marketing for delivery from Woodfibre's proposed export facility near Squamish, British Columbia, the company said.
The wholly-owned Pacific Oil & Gas subsidiary will provide 750,000 mt/year of LNG over a 15-year period on a free-on-board basis to BP Gas Marketing, wholly-owned indirect subsidiary of BP, it said in a May 6 statement.
The latest deal will increase BP Gas Marketing's total LNG offtake to 1.5 million mt/year -- 70% of Woodfibre's anticipated production, the statement also said. Woodfibre is open to securing additional long-term contracts for the remaining 30%, but a representative said that they may also open up to offering cargoes on a spot basis.
"Forward-looking companies like BP are turning to projects like ours for sustainable, stable gas that will supply a clean energy mix," said Ratnesh Bedi, PO&G's president. "We look forward to working with BPGM to deliver Canadian natural gas from one of the lowest carbon footprint LNG facilities in the world, and help advance the climate goals of growing economies as they phase away from coal, lower their emissions, and meet net-zero targets."
Woodfibre is targeting a final investment decision in the third quarter and originally estimated the cost to be C$1.6 billion-C$1.8 billion ($1.31 billion-$1.48 billion), but final costs will depend on the final engineering, procurement, and construction contract, which is being finalized, a spokesperson said.
Construction for the facility was expected to begin in summer 2020 but was delayed by the coronavirus pandemic. According to the company website, it has received environmental approvals from the indigenous Squamish Nation, where the facility will be built, and the British Columbia and Canada governments. Additionally, its facilities will run on hydroelectricity for power generation -- the first LNG facility of that kind in Canada -- reducing emissions by 90% compared with similar LNG liquefaction facilities.
The company was granted a one-time five-year extension on its Environment Assessment Certificate on March 30, 2021, according to the British Columbia Environmental Assessment Office. Once the EPC is finalized, construction is estimated to take four years.
"The use of renewable energy for e-drive power places Woodfibre -- and Squamish -- at the forefront of the world's clean energy transition," said Ron Bailey, president of Woodfibre LNG.
"Projects like Woodfibre LNG are critical, to our province, country, and world," said Rebecca Scott, a Woodfibre LNG spokeswoman. "We are building a facility that sets a standard for energy facilities across the globe and simultaneously providing new jobs at a critical time."