Construction, or at least site preparation for construction on the $1.6-billion Woodfibre LNG export facility on Howe Sound is set to begin in the third quarter of 2021. Heavy construction to begin in 2022, according to outgoing Woodfibre LNG president David Keane.
Keane, 69, is set to retire from his role next month, but will remain on as a strategic consultant to the project.
He joined the company in 2018, for two years. Previously, he was CEO for the BC LNG Alliance.
He will head up finding his replacement, he said.
The recent delay in getting Woodfibre under construction is due to the pandemic, and in January 2020, Woodfibre's preferred construction company McDermott filed for Chapter 11 bankruptcy protection in the U.S.
The company has restructured, Keane said.
"Everybody recognized that there were some financial issues with the [Engineering, procurement, and construction] contractor, that has been resolved," he said.
"They went into bankruptcy protection in January, they emerged in very strong financial condition in July."
He said Woodfibre is finalizing contractual discussions with them. "That should be wrapped up by the end of the year," he said.
Woodfibre had its environmental assessment certificate extended for an additional five years on Oct. 25.
The certificate was set to expire by Oct. 26 this year, but has been renewed by the provincial Environmental Assessment Office.
The company is also close to signing its construction agreement with FortisBC, Keane said.
"That will be a significant milestone that will be done shortly," he said.
This fall Woodfibre LNG has also been negotiating with the Tsleil-Waututh First Nation on an Impact Benefit Agreement for the marine impact of the project on that Nation's territory.
The company signed a term sheet with them last year.
"So that is progressing," he said.
The company took care of plant financing in September, he said.
"There's a lot of work that has been quietly ongoing," he said.
Environmental group My Sea to Sky has been fundraising for a judicial review of the environmental assessment certificate extension, and promoting the idea that the project can still be stopped.
"The government follows its process and it followed — I feel — its process to the letter of the law and it is what it is," he said. "I know they are raising money and there is very little more I can say about that," Keane said.
My Sea to Sky's Tracey Saxby told The Chief donors raised over $10,000 in 48 hours to support a judicial review.
The organization is currently at $16,600 of its $20,000 goal.
"We still have some work to do, but with help from our volunteers and legal advisors, and the ongoing support from concerned Howe Sound residents, we hope to finalize our petition soon," she said.
Keane told Squamish council late last month that the final investment decision (FID) would come early in the summer of 2021.
Typically, FIDs refer to the final decision to invest in a project made by the board and executive committee, but in this case, it means, the chairman giving the final nod with the notice to proceed to construction, according to Keane.
(Woodfibre is a subsidiary of Pacific Oil & Gas Limited, which is part of the Singapore-based RGE group of companies. Royal Golden Eagle, was founded by Sukanto Tanoto, who is also its chairman.)
Most of the major approvals — federal, provincial, and Squamish Nation — are behind them now, but the project still needs BC Oil and Gas Commission permits to construct and other local government permits.
"I don't want to downplay them. They are all important and we are working very hard at getting those," he said.
"I don't think [the project] can be stopped unless we decide it is not the right economics for the project. I think rather than focussing on 'can it be stopped' is working on the work that we have done."
Woodfibre currently has about 50 employees, according to Keane.
The company has aimed to hire local people first, he said.
Sea to Sky companies have been used for $13 million worth of site clean up, for example. A new community liaison, Laura Prosko, has been hired, who lives in town, too.
Main construction will involve hiring 600 workers.
"That peak will be in 2023." Keane said.
The company has applied to amend its environmental assessment to include a floatel, floating housing, that would be located near the site after community and local government objections to a land-based workcamp for employees.
Keane said the company recognizes that the environment is important.
“Climate change is a significant issue of our time. Had the pandemic not come along, it would have been the most important issue of our time," he said. "What people forget or ignore, when this project was first conceptualized, it was going to be using gas compression to liquefy the gas," he said. Had they done that, their greenhouse gas emissions would have been 630 to 680,000 tonnes per year.
In 2013, the company switched to electric compression and other changes have been made along the way.
The 2020 forecast for the company's operations is 69,0000 tonnes of GHGs per year.
"It is important to note... people forget that we don't live in a bubble. If we lived in a bubble I would say that everything should be zero and we should be not doing anything, but all that air pollution and all those greenhouse gas emissions produced in Asia go on top of us, so we need to be doing things to reduce those emissions."
Even under the current scenarios, natural gas demand is going to grow by 30% between now and 2040, according to the International Energy Agency's World Energy Outlook 2020 report.
"China is going to get its natural gas, we need to be clear about that. It is going to receive its supply, the question is where will it receive its supply from? Will it come from Canada where we have the best regulations both in the upstream, in the natural gas producing regions and in the downstream and in the plants, or will it come from the United States, Australia, or Russia or Iran or other Middle Eastern countries where we don't have robust regulations."
Not surprisingly, My Sea to Sky doesn't agree with this characterization.
Saxby called it "ludicrous" that Woodfibre LNG and FortisBC are building new fossil fuel infrastructure and say this will help solve the climate crisis.
"The idea that Canadian LNG is 'clean' or 'green' is a false narrative. LNG is not green, it has been greenwashed. LNG is still a fossil fuel that will increase fracking in northeast B.C., and building new LNG infrastructure will lock in emissions for another 40 years and make it impossible for our communities to reach their climate targets," Saxby said.
"The latest report from the IEA, Renewables 2020, states that 'Renewables are set to lead the global electricity sector.' The science is very clear that we need to immediately transition away from fossil fuels, eliminate fossil fuel subsidies, and begin retiring existing fossil fuel infrastructure."
Asked how the economics work for the project given struggling natural gas prices, Keane said that the outlook is long term, not short.
"We have a 40-year export license. You are not going to be looking at the spot price of LNG to make a long-term decision. You look at what your long-term forecast is of prices in Asia and right now we are just about at where we need to be satisfied. Long-term prices are going to increase so we are a very firm believer that economically, this project will work."
Another thing those who oppose LNG say is that the project does not pay its fair share of taxes as it is subsidized.
Keane disagrees.
"I don't believe in being subsidized.”
When LNG was first proposed in B.C. there was an LNG rate for electricity, which was $84 a megawatt-hour.
"The concern was... why is the LNG industry being penalized? If I was coming into BC and wanted to build a ball-bearing factory, then I pay the industrial rate, $53 a megawatt-hour."
LNG projects now pay what other industrial projects pay.
"I shouldn't be singled out to pay a higher rate because some people don't want to see the project go forward and they see that as a good way to kill it," Keane said.
My Sea to Sky's Eoin Finn argues the industrial rate was meant to serve industries that used relatively little electricity but provided a lot of jobs. "Woodfibre LNG will use a lot of electricity (1,550,520 MWh per year) but provides relatively few jobs," he said.
The project may get a deferral of provincial sales tax (PST), like LNG Canada has, but that still ultimately has to be paid, Keane said.
Other taxes have to be paid, he said.
"So, I don't know what taxes I am being exempt from," he said.
Finn says that the deferral of provincial sales tax on construction materials is essentially an interest-free loan on the 7% PST that Woodfibre would have to pay on the plant's construction.
It would take decades for it to come due, Finn argues.
"What happens if Woodfibre LNG goes bankrupt? Will B.C. ever see that money?"
Woodfibre LNG is being given a 3% tax break on corporate income taxes by the provincial government as the B.C. corporate income tax rate has been lowered from the regular rate of 12% to 9% solely for LNG, Finn argues.
"Woodfibre LNG is not paying their fair share, and it is more important than ever to ensure that these foreign-owned, multi-billion dollar companies are not making a profit at our expense," Saxby said.
Woodfibre is holding information sessions Nov. 23 and 24 from 6 p.m. until 7 p.m.
Go to Woodfibre LNG Public Information Sessions on Facebook for more information.
