Canadian LNG Projects Delayed Amid COVID-19 Crisis

Woodfibre LNG, a small-scale project in British Columbia, will be delayed by a year amid the Covid-19 crisis, which has prompted the shutdown of a contractor that Woodfibre LNG worked with for the supply of components, CBC News reports, citing a company spokeswoman.

The shutdown of the component supplier—a Chinese company—was aggravated by the fact that Woodfibre LNG's preferred contractor for the construction of the underwater part of the project had filed for Chapter 11 bankruptcy protection.

As a result of this unfortunate combination of events, Woodfibre LNG will file for a five-year extension to its environmental certificate, which, CBC reports, will expire this October.

While Wooddibre LNG is a small project, with an annual export capacity of 2.1 million tons of liquefied gas, a much bigger project, Canada LNG, has also run into difficulties. The company said earlier this month it had laid off 750 workers to prevent the spread of the coronavirus.

The facility, which is on track to become operational before 2025, will initially have two liquefaction "trains", each with a capacity of 6.5 million tons of LNG. The project could also add another two trains at a later stage, bringing the total capacity of the facility in Kitimat, in northern British Columbia, to as much as 26 million tons annually. Construction of the LNG Canada trains has not stopped.

The outlook for the LNG industry has been gloomy for the short term but somewhat optimistic for the medium to long term. This week the short-term outlook grew gloomier after India, one of the world's top importers of LNG, imposed a national lockdown on its population of 1.3 billion to stem the spread of Covid-19. As a result, all nonessential businesses are closing, and the demand for LNG has fallen off a cliff. Yesterday, Indian LNG importers declared a force majeure on deliveries, according to industry sources who spoke to Reuters.

By Irina Slav for Oilprice.com

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