KBR wins Kitimat LNG FEED contract for liquefaction, export off Canada's west coast

Source: Apache

Kitimat LNG partners Apache Canada Ltd. (NYSE:APA) and EOG Resources Canada Inc. (NYSE:EOG) have awarded KBR (NYSE:KBR) the Front End Engineering and Design (FEED) contract for the planned natural gas liquefaction and export facility on British Columbia's west coast. Financial terms of the contract were not disclosed. 

"This is another important milestone for Kitimat LNG, taking us a significant step closer in being able to export LNG to Asia-Pacific markets as soon as 2015," said Janine McArdle, president of Kitimat LNG. "KBR is a recognized industry leader in LNG developments and brings extensive experience to our project." 

Last month, Kitimat LNG Partners entered into an agreement to purchase the remaining 50 percent interest in Pacific Trails Pipeline Limited Partnership, thus securing full ownership in the infrastructure to transport natural gas from production areas to the Kitimat LNG facility. The Pacific Trails Pipeline is a planned 463-kilometre (287-mile), 914-mm (36-inch) diameter underground line that will carry natural gas from Summit Lake to Kitimat. 

The Kitimat LNG export facility is planned to be built on First Nations land under a unique partnership with the Haisla First Nation. 

Apache Canada and EOG Canada are in marketing discussions with potential Asia-Pacific LNG customers. The partners expect to have firm sales commitments in place by the time a final investment decision is made near the end of 2011. Initial shipments of LNG are expected to begin in 2015. 

Kitimat LNG currently has an application pending for a 20-year export licence before Canada's National Energy Board. A hearing on the application is set for June 7, 2011. 

Kitimat LNG Facility 

Apache Canada and EOG Canada plan to build the Kitimat LNG facility on Bish Cove, approximately 650 kilometres (400 miles) north of Vancouver. The facility is planned for an initial output capacity of nominally 5 million metric tonnes per annum. Apache Canada is the managing partner of KM LNG Operating General Partnership, which owns 51 percent of the Kitimat LNG facility and is the facility operator. EOG Canada, through its wholly owned subsidiaries, owns the remaining 49 percent of the Kitimat LNG facility.

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