W|EPC: LNG Canada – Updated Satellite Image Analysis & Construction Progress – Q420 Project Monitor

October 2020

Total Pages: 14

W|EPC – LNG Canada – Q420 Project Monitor

Key Takeaways – Page 2

LNG Canada Cost & Schedule Updates

Updated Estimates – Page 4
Project Milestones – Page 5
Progress Analysis – Page 6
Analyzing Fluor’s 27.5% Reported Progress – Page 7
Project Staffing – Page 8

Satellite & Aerial Image Analysis

July 2020 Overview – Page 10
September 2020 Site Analysis – Page 11
July vs September 2020 – LNG Storage Tank – Page 12
Module Yard Analysis – Page 13

Key Takeaways:

1) Delays At LNG Canada Continue to Build (Pages 4 – 7, 10 – 13):

Fluor reported ~27.5% Engineering, Procurement, Fabrication, & Construction (EPFC) progress in September, vs our current estimate of…
We believe Fluor’s 27.5% guidance implies module fabrication progress of ~45%, which is ~9x…
Fluor also referenced COVID-related project delays (without getting specific)
Our Current Delay Estimate:…..
Estimated Probability Of Maintaining Schedule:…..
Mind The Gap: There are several potential explanations for such a degree of progress variance…

2) Examining Fluor’s Goal of 2,500 On-Site Workers By Dec-20 (Pages 4, 8, 10 – 13) :

Aerial images suggest meaningful concrete, structural steel, and significant construction activities have yet to start (beyond piling)…
Pre-COVID, Fluor’s reported onsite labor was higher than the project’s publicly reported staffing levels, leading to cost overruns (Pages, 4, 8)
Limited construction work fronts could constrain Flour’s ability to…

3) Kicking The Can Down The Road… LNG Canada Starting to Resemble Another Fluor/JGC Project… (Pages 4, 8):

In 3Q13, CPChem awarded Fluor & JGC a ~$6B EPC contract for an Ethylene Cracker in Texas. ~39-months later, Fluor/JGC announced the project would be over budget. The project was finished in mid-2018 (a year behind its baseline plan).
~23-months after FID, we believe the LNG Canada (JFJV) schedule is slipping and costs are…