Woodfibre LNG Signs Up BP As First Customer

Artist's rendering of the Woodfibre LNG project. Image: Woodfibre LNG

The Woodfibre LNG project has signed a unit of BP Plc as its first customer, a crucial step towards developing the export facility at Squamish, B.C.

Woodfibre LNG Export Pte Ltd. said Wednesday that BP Gas Marketing Limited had agreed to buy 0.75 million tonnes per year (mtpa) of LNG for 15 years starting in 2023, when the project is expected to come onstream.

The facility's capacity is expected to be 2.1 mtpa.

“Woodfibre’s binding deal here with BP could prove to be a pivotal step in getting this project over the line,” said Mark Young, senior analyst at Evaluate Energy. “BP has contracts that will be active deep into the 2030s to supply LNG to importers in China and Japan from its global supply portfolio.”

He said gas exported out of British Columbia is potentially a very attractive option to help fulfil these particular contracts due to being relatively nearby the markets in question.

“Any agreement following this offtake arrangement that would ensure reliable feedstock from BP Canada for Woodfibre would be another vital development, and, obviously, BP is a very attractive, deep-pocketed partner to have a vested interest in Woodfibre’s success.”

Royal Dutch Shell plc approved in October its 14-mtpa project in Kitimat, B.C., triggering a new cycle of projects to be built to meet an anticipated LNG shortage in mid-2020s.

But the LNG Canada project is the only one in Canada to have progressed to construction stage.

Woodfibre LNG Export is a subsidiary of Pacific Oil & Gas Limited (PO&G) part of the Singaporean conglomerate RGE. Pacific Oil & Gas operates two LNG import terminals in China, as well as other upstream and midstream oil and gas assets.

Last month, PO&G said it is acquiring all of the issued and outstanding shares of privately-held Canbriam Energy Inc. and its Montney assets for cash consideration in a move that further advances PO&G’s LNG aspirations.

Concurrently,  BP Canada Energy Group ULC (BP Canada) and PO&G are working on an agreement for BP Canada to provide gas transportation and balancing services ensuring a reliable delivery of gas to the Woodfibre LNG export facility over the 15 year term. 

"We are honoured to have BP as a foundation customer of our Woodfibre LNG project," said Ratnesh Bedi, PO&G president. “BP is a global LNG portfolio player and a pioneer in the international LNG business. We look forward to providing BP with a consistent supply of flexible Canadian LNG that can displace more carbon intensive fuels.”

The Woodfibre LNG project is located approximately 7 kilometres west-southwest of Squamish. It involves the construction and operation of a LNG export facility by Woodfibre LNG Limited on the previous Woodfibre pulp mill site.

“Woodfibre LNG is a tremendous opportunity for British Columbia and Canada to get clean natural gas to growing markets in Asia,” said David Keane, president of Woodfibre LNG. “PO&G has made significant investments in Canadian natural gas because they are confident in the future of LNG in Canada.” – with files from Reuters

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