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Webber Research: LNG Canada Q422 Project Update – Satellite Image Review, Revised Timeline, Cost Ests

For access information please contact Walter Lobo at [email protected], or at [email protected]

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Webber Research: LNG Canada (Shell) – Q421 Project Update

W|EPC: LNG Canada – Q421 Project Update

 

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W|PEC: LNG Canada Q321 Project Update

 

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W|EPC: LNG Canada – Q321 Timeline, Budget, & Progress Update

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W|EPC: LNG Canada Q320 Monitor – Labor Dynamics & Baseline Satellite Image Review

LNG Canada Q320 Monitor – Labor Dynamics & Baseline Satellite Image Review

Shell • Petrochina • Mitsubishi • Kogas • Petronas

1) Union Craft Avg. Wage Rate Escalators & Impact On JGC/Fluor, and broader project cost…

What’s Happened/Changed: Part of our current focus is on LNG Canada’s wage rate escalation and union labor agreements post-2023.
Why Does That Matter: EPC lump sum proposals generally include labor escalation between 1-3% per annum (rates vary based on geography/availability). Labor agreements supporting LNG Canada and other B.C. projects expire in 2023 and have a relatively advantageous average labor escalation rate of…..continued.
For context, union labor strikes, renegotiated agreements, and significant wage rate escalation supported Gorgon LNG coming in $20B+ over budget. 
What’s The Impact:…..continued (Page 3)

2) Taking A Look At JFJV’s Longer-Term Labor Inflation Risk (Page 5)

3) JFJV’s Construction Activity – What does it tell us about the project timeline? (Page 8)

4) Satellite Image Analysis Baseline –  Benchmarks for Remainder of the Project…. (Pages 9-17)

W|EPC: LNG Canada Q320 Monitor – Labor Dynamics & Baseline Satellite Image Review

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LNG Canada Update: Trouble Ahead For Shell’s LNG Flagship?

An Empty Module Yard & Mounting Schedule Delays

Key Takeaways (pages 1, 5)
Estimated LNG Canada Schedule Shifts (page 2-3)
Satellite Image Review: COOEC Fluor Module Yard Layout (May 17, 2020) (page 4)
Satellite Image Review: Module Layout Descriptions (page 5)
Satellite Image Review: CFHI Module Yard Pre-Assembly Areas (page 6)
Long-Term Thoughts & Key Questions (page 7)

Key Highlights:
• Still Moving At A Crawl. As of May, module fabrication was ~2% complete, well behind our ~11% estimate in W|EPC’s February 2020 (pre-COVID 19) schedule…
• Satellite Image Review: The COOEC-Fluor Heavy Industries (CFHI) module yard pre-assembly areas look…
• Playing Catch Up Won’t Be Cheap. The schedule slip should put even more pressure on the back-end of LNG Canada’s timeline…continued…

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LNG Canada Update: Shell, Fluor, JGC, & Force Majeure

  • **March 18 Update………………………………….Page 2
  • Executive Summary…………………………………Page 3
  • COVID-19 Impact……………………………………Page 4
  • EPC Schedule Analysis……………………………..Page 5
  • Site Labor Analysis 6………………………………..Page 6
  • Site Labor EPC Cost Impact……………………….Page 7
  • Conclusions…………………………………………..Page 8

Update: In light of yesterday’s announcement that the Shell-led LNG Canada project was cutting its staffing levels in half over the coming days, we felt it worthwhile to pass along our LNG Canada Update from late February, along with a slide on our updated thoughts. (Page 2)

COVID-19 Impact Updates
1. The World Health Organization (WHO) officially declared COVID-19 a pandemic on 11-Mar-20.
a. JFJV may have a stronger FM claim now that WHO has declared the COVID-19 a pandemic, to the extent that JFJV specifically has “pandemic” or “epidemic” listed as an FM event in their contract.
b. FM Impact of Chinese module fabrication yards…….Page 4

2. On 17-Mar, LNG Canada and JFJV both announced that JFJV’s on-site workforce in Kitimat would be halved in order to increase social distancing and help prevent the spread of COVID-19. Given that the announcement was made jointly between JFJV and LNG Canada – impact on FM/schedule relief.…..Page 5

3.While JFJV did not announce when the site at Kitimat would resume a full workforce, it took “several” weeks for workers to return to JFJV’s Chinese fabrication yards…..Page 5

LNG Canada Planned Vs Foretasted Progress Where Were We In February, and Where Are We Heading Now?…..Pages 5-8


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