The long and winding road that eventually led the $40 billion LNG Canada project to get shovels in the ground was fraught with challenges and lessons learned and could serve as a blueprint for other Canadian LNG projects going forward.
While speaking at a recent event in London, U.K., to discuss the scope of Canadian LNG growth, Susannah Pierce, LNG Canada's director external relations, walked those in attendance through some parts of the journey that eventually led to a final investment decision (FID) and the start-up of construction.
And the odyssey wasn’t easy and the trials and tribulations were many.
“I’ve been with this project now almost seven years and I like to joke about developing a LNG project [that] one year is like a dog year, so really it is 49 years on this project to date,” she said.
Late last year, LNG Canada along with its partners — Royal Dutch Shell plc, PETRONAS, PetroChina, Mitsubishi Corporation and Korea Gas Corporation (KOGAS) — signed off on building an export facility in Kitimat, B.C. The $40-billion price tag makes the project the largest energy investment in Canadian history.
Pierce said the significance of the LNG Canada project is demonstrated by its ability to successfully navigate through complex and strenuous regulatory hurdles while demonstrating and embracing a strong environmental, societal and governance (ESG) platform.
“It’s extremely exciting to be a part of a project … with such a significant milestone for Canada. And I’m not just talking about the financial investment, which is significant, but the fact that we actually got a project like this done on the West Coast of Canada in the province of British Columbia, the birthplace of Greenpeace,” Pierce said.
“A land where, of course, Indigenous rights and title are not enshrined yet in treaties. A place where continued efforts are being made, I think with government as well as stakeholders including ourselves, to continue to show leadership as it relates to climate,” she added.
“In the country of Canada where, initially when I joined the project, one of our joint venture participants said to me, ‘Canada? That’s one of the most unstable places you could ever choose to invest — they have elections every four years.’ So you see it was a significant milestone because here we were, right out of the blue, something like this happened.”
One of the other major challenges layered in on the path to FID was the weakened price environment and tough market conditions that transpired earlier this decade as the project was still trying to get off the ground.
“That’s when the bottom also fell out in the market and oil prices and our costs were way too high to be competitive — a real challenge. But instead of throwing in the towel, our joint venture participants … said, ‘Let’s keep going. Let’s refine those pencils. Let’s see what we can do, working with governments and stakeholders to get the project across the line,” Pierce said.
A focus on First Nations
Pierce said that from the onset, LNG Canada and its partners realized the vital importance of forming strong ties, business and otherwise, with First Nation stakeholders.
“For this project what made it also, I think unique and different was a very intentional and deliberate process to include First Nations in the development. It wasn’t in an equity position, which some projects have done and I think have done well, it was basically more in a partnership position of engaging first,” she said.
“Many of our First Nations that we work with said, ‘This is one of the first times we didn’t have to ask to be included. We were included.’ And this doesn’t mean that our discussions went well out of the get-go. In fact, they didn’t. It wasn’t always easy.”
“But I think through those consultations and discussions, through the agreements that we made, through the commitments to the environment, to development of First Nations, to working on this project side-by-side, we’ve now achieved that most significant investment in Canadian history.”
While Pierce didn’t give a number on project spending since the positive Oct. 1, 2018, FID announcement, she did say that a “significant amount of money” has been spent directly within Canada because LNG Canada has set a “priority to spend in Canada as much as we possibly can.”
To date, Pierce said LNG Canada is close to $2 billion in contracts awarded within the province of B.C. and that a “significant amount of that” is to First Nation businesses.
“I’m very proud of what we’ve done with our First Nations partners,” she said.
Encouraging women to consider the trades
Pierce said she is also proud of LNG Canada’s commitment to encourage women to consider a career in the trades and, eventually, perhaps working on the project.
“We made a commitment right out of the get-go to make sure we put a priority on helping women get into trades. And why is it we did that? Because we looked at the population and realized why is the population 50 per cent women but so underrepresented in oil and gas and the trades? We’re about five per cent,” she told the London audience.
“And we realized that one of the biggest challenges in Canada to developing a major infrastructure project is in fact labour. So let’s deal with that challenge head on. So we’ve invested significantly in workforce development. Very recently we announced a very innovative program called Your Place which would actually pay for training … for any woman who chooses to go through the process.”
And the response to the program has exceeded Pierce and LNG Canada’s expectations.
“I can tell you I had estimated that we would spend a certain amount of money marketing this opportunity. We didn’t have to. Within a short period of time we had more than 1,000 applicants, one-third of whom were Indigenous women,” Pierce said.
“So the concept that women don’t want to work in the trades is false. We need to create the workplace and the environment for them to feel comfortable. And I’m proud of what we’ve done from that perspective.”