LNG Canada pipeline 80 percent complete, costs continue to rise

TC Energy’s Coastal GasLink project, which will supply natural gas to the Shell-led LNG Canada export terminal, is progressing with the construction of the pipeline in British Columbia while costs continue to rise.

Coastal GasLink said in a statement on November 29 that the pipeline was 80 percent complete. The overall progress reached about 75 percent in September and in October about 77.6 percent.

To date, Coastal GasLink has installed more than 470 km of pipe across the 670-km route, according to the firm.

Cumulatively, the company’s team has spent 38 million hours working on this project, with more than 6,000 people employed at its peak, it said.

The pipeline has the capacity to transport 2.1 billion cubic feet of natural gas per day (bcf/d) from Groundbirch, BC to Kitimat, with the potential to boost it further.

TC Energy expects to reach mechanical in-service of the pipeline by the end of 2023.

Costs to rise further

In July, LNG Canada and TC Energy reached a revised deal for the pipeline. The project now has a price tag of C$11.2 billion.

However, the project costs continue to rise and TC Energy said this week that the firm expects a “material increase in project costs” and TC Energy’s corresponding funding requirements.

“We continue to face significant cost pressures in Western Canada relating to labor costs and shortages of skilled labor, along with contractor underperformance and disputes. The project has also been impacted by other unexpected events including drought conditions, and erosion and sediment control challenges,” the firm said.

TC Energy said it would provide an updated capital cost estimate in early-2023 that would incorporate the scope of recent developments.

As per the LNG Canada plant in Kitimat, the project is more than 70 percent complete.

The first phase of the giant LNG Canada project includes building two liquefaction trains with a capacity of 14 mtpa.

LNG Canada expects to deliver its first cargo by the middle of this decade.

Besides operator Shell, other partners in LNG Canada are Malaysia’s Petronas, PetroChina, Japan’s Mitsubishi Corporation, and South Korea’s Kogas.

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