Enbridge to acquire 30 per cent stake in Woodfibre LNG in B.C.

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Enbridge Inc. ENB-T is investing US$1.5-billion for a 30-per-cent stake in the Woodfibre LNG terminal in British Columbia, hoping to bolster the long-delayed project that needed a deep-pocketed investor to help export liquefied natural gas to Asia.

Woodfibre is aiming to become Canada’s second exporter of the fuel, after Shell PLC-led LNG Canada, which has a terminal under construction in Kitimat, B.C., with plans to begin shipments to Asia in 2025.

Woodfibre would start construction in September, 2023, and begin exporting natural gas in liquid form to Asia in 2027 from its industrial site near Squamish, B.C., 65 kilometres north of Vancouver.

The Squamish-area LNG facility, to be built on the site of a pulp mill that closed in 2006, would have an export capacity of 2.1 million tonnes a year. LNG Canada, by contrast, is much larger, with an initial export capacity of 14 million tonnes a year.

Enbridge said on Friday that Woodfibre has lined up buyers for the fuel in Asia, including through a 15-year commitment with London-based BP Gas Marketing Ltd., which would account for 70 per cent of the export terminal’s capacity.

The Calgary-based energy infrastructure company will be buying 30 per cent of Woodfibre, while Pacific Energy Corp. Ltd. will own the remaining 70-per-cent interest. Pacific Energy is part of privately owned RGE Pte. Ltd. of Singapore and controlled by Indonesian businessman Sukanto Tanoto.

Pacific Energy owns Pacific Canbriam Energy Ltd., which is prepared to supply its natural gas from northeast B.C. to be transported through pipeline systems to Woodfibre.

Construction costs are forecast to total US$5.1-billion, including the Squamish-area export terminal and other expenses, notably those related to FortisBC’s proposed Eagle Mountain-Woodfibre Gas Pipeline.

Woodfibre president Christine Kennedy said LNG will play a crucial role globally as a transition fuel to help displace the use of thermal coal in the production of electricity. “It’s always important to understand and recognize that in the absence of LNG, coal plants continue to be built around the world,” Ms. Kennedy said in an interview.

But Tracey Saxby, executive director of climate-activist group My Sea to Sky, said LNG should not be viewed as good transition fuel for the world. “Building LNG facilities is a multidecade investment that will increase fracking in northern B.C. and lock the province into fossil fuels for decades,” Ms. Saxby said.

Brian Johnson, Enbridge’s vice-president of Canadian gas transmission and midstream, said Woodfibre emerged as an ideal fit after Enbridge researched potential investments across Canada, with challenges in transporting natural gas from Western Canada to the East Coast. “The struggle is how do you get all the Western Canadian gas all the way over there? I mean the cost structure is different,” Mr. Johnson said.

Proponents of two export proposals on the East Coast, Pieridae Energy Ltd.’s Goldboro LNG in Nova Scotia and Repsol SA’s Saint John LNG in New Brunswick, are studying the economics of shipping LNG to Europe, but face pipeline constraints in Central Canada and New England.

Mr. Johnson said LNG exported from B.C. to Asia would still indirectly help Europe as the continent seeks to wean itself off natural gas from Russia. “Basically, it’s a global market. So the more you can get to Asia, the more other stuff can go to Europe,” he said, adding that LNG exports to Asia would free up supplies of the fuel in Qatar and elsewhere to be rerouted to Europe.

Omar Mawji, an analyst with the B.C. Centre for Innovation and Clean Energy, said Enbridge has a system of B.C. pipelines that would feed into FortisBC’s planned Eagle Mountain-Woodfibre Gas Pipeline.

“This is a very easy way for Enbridge to participate in LNG on the West Coast without putting up too much risk,” he said.

Mr. Mawji cautioned that construction costs are skyrocketing at an array of energy projects, including at Woodfibre, which had envisaged a $1.6-billion price tag for the export terminal during a ground-breaking ceremony in 2016.

FortisBC’s plans include running two pipelines through a nine-kilometre tunnel that would go through Monmouth Ridge Mountain and underneath the Skwelwil’em Squamish estuary wildlife management area. The costs of that tunnel and two pipelines alone are estimated at $341-million. That number does not include expenses related to building the remainder of the 50-kilometre pipeline route.

Earlier this year, FortisBC notified the B.C. Environmental Assessment Office of its latest plans, which the regulator will review in a collaborative process with the Squamish Nation.

“As a project regulator, our role does not change despite the investment from Enbridge,” Squamish Nation spokesperson Wilson Williams said in a statement. “The Squamish Nation will still hold the project to the rigorous standards set out in the impact benefit agreement to ensure our lands and our waters, as well as our historical ties and the cultural significance of the territory, are respected.”

On Friday, Enbridge said it posted a second-quarter profit of $450-million, compared with nearly $1.4-billion in the same period of 2021.

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