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Petronas prepares FEED on Canada Pacific Northwest LNG project

British Columbia LNG project in design competition

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolThe Malaysia national oil company Petronas and its partner Japan Petroleum Exploration Corporation Ltd (Japex) are opening a design competition for the greenfield Pacific Northwest LNG project in British Columbia, Canada.

This decision came out after the completion of the acquisition of the Canadian company Progress Energy Resources Corp. by Petronas and its re-branding into Progress Energy Canada (Progress).

With assets in the Deep Basin in Alberta and in Foothills, Progress is the largest land holder in the Montney shale gas basin and currently produces more than 300 million cubic feet per day (cf/d) of natural gas.

With this acquisition Petronas secured 1,9 trillion cubic feet of proven and probable reserves (2P) of unconventional gas in northeast British Columbia and northwest Alberta for the supply of natural gas to its project of liquefied natural gas (LNG) plant.

For this Pacific Northwest LNG project or British Columbia LNG project, Petronas selected the Lelu Island along the Canada Pacific Coast as to open direct access to ice-free sea water.

Petronas_Progress_Pacific_Northwestern_LNG_project-map1From the conceptual study, the Pacific Northwest LNG project should include:

 – Gas inlet system

 – Gas processing units

 – Two LNG trains of 6 million tonnes per year (t/y) capacity each

 – Marine and jetty topsides facilities

 – Offsites and buildings

 – Storage and loading facilities

 – Utilities and power generation.

In a second phase a third LNG train of 6 million t/y should be added.

Bechtel, KBR, Technip in BC LNG competitive FEED

Based on this basic design, Petronas and Japex have decided to organize a design competition for the front end engineering and design (FEED) of their Pacific Northwest LNG project.

For this design competition, Petronas and Japex have awarded FEED contracts to three teams of engineering companies:

 – Bechtel from USA

 – KBR and JGC 

 – Technip with Samsung Engineering and Hanqiu Contracting and Engineering Corporation (HQCEC) from China

Petronas_British-Columbia_LNG_ProjectThis design competition is planned to take one year, as Petronas and Japex expect to make the final investment decision (FID) at the end of 2014 for a completion of the first two LNG trains in 2018.

With this tight schedule, Petronas and Japex are targeting to overspeed the other LNG projects along the British Columbia coast and close the best deals on LNG export to Asia.

In this scenario Petronas and Japex intend to take advantage of their Prince Rupert gas transmission project to link their shale gas reserves in British Columbia and Western Alberta to the Pacific Northwest LNG project

In parallel to the construction of this $6 billion capital expenditure Prince Rupert pipeline and $20 billion Pacific Northwest LNG project, Petronas continues to develop its natural gas production on the upstream side.

Petronas_Canada_Pacific-Northwest_LNG_ProjectThen in order to secure its LNG export to Asia and share the costs, Petronas is looking for additional partners to Japex to take a stake in the Pacific Northwest LNG project.

In April Japex acquired 10% of the interests in Progress and agreed to buy 10% of the LNG production from the Pacific Northwest LNG project during 20 years.

Based on this first contract signed with Japex, Petronas will take the opportunity of the design competition between Bechtel, KBR and Technip to attract new partners ready to take up to 50% stake in the Pacific Northwest LNG project in British Columbia.

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