Pacific Energy and Enbridge Announce Partnership in Woodfibre LNG

Pacific Energy and Enbridge announced an agreement to jointly invest in the construction and operation of the Woodfibre LNG project.

Woodfibre LNG is a 2.1 million tpy LNG export facility with 250,000 m3 of floating storage capacity being built near Squamish, British Columbia, Canada. The project is supported by two long-term offtake agreements with BP Gas Marketing Limited for 15 years representing 70% of capacity, with further development commitments up to 90%. Woodfibre LNG announced in April that it had issued a notice of prosecution to global engineering and construction firm McDermott International and that the project is expected to be commissioned in 2027.

Woodfibre LNG will use electric motors powered by renewable hydroelectric energy, making it one of the cleanest LNG export facilities in the world. The project is the only one in Canada with a non-treaty Indigenous environmental assessment certificate, the first project approved under the Government of Canada’s “five principles” of environmental assessment, and received all major Federal, Provincial and First Nations approvals. .

“This partnership is an important milestone for the Woodfibre LNG project,” said Ratnesh Bedi, President of Pacific Energy, “and it further accelerates Canada’s ability to be a significant player in the global energy transition with the lowest LNG production. carbon in the world.

“Enbridge is an accomplished North American energy company with significant natural gas operations in British Columbia and Woodfibre LNG is pleased the companies have entered into this investment agreement,” said Christine Kennedy, President of Woodfibre LNG. “We believe this agreement is a testament to the project’s credentials, our world-class indigenous partnerships, incredible environmental due diligence, and Woodfibre LNG’s ambition to produce the lowest-emitting LNG in the world.

“As a leader in the energy transition, Enbridge is thrilled to be part of the installation of Woodfibre LNG through this partnership,” said Al Monaco, President and CEO of Enbridge. “This facility will provide global LNG markets with a safe, secure and sustainable source of natural gas from British Columbia through a long-term transportation agreement on our T-South pipeline system. This investment is a natural extension of our export pipeline strategy, with solid business fundamentals.

“Expanding global access to natural gas through LNG will play a critical role in North America’s energy future and help reduce global greenhouse gas (GHG) emissions through the replacement of coal-fired power generation, creating strong alignment with our ESG objectives,” added Monaco.

Under the partnership agreement, Enbridge will invest in a 30% interest in the C$5.1 billion Woodfibre LNG project, with Pacific Energy retaining the remaining 70% interest in the facility. Capital for the project includes a construction assistance contribution for FortisBC Energy Inc.’s Eagle Mountain to Woodfibre Pipeline Expansion, which will connect the facility through FortisBC’s system to the T- South of Enbridge.

Pacific Energy and Enbridge will each make pro-rated contributions during construction through a combination of asset-level financing and equity investments. In exchange for its capital contribution, Enbridge will receive a preferred interest that will provide predictable future cash flows. The partners will jointly participate in project execution and governance of ongoing operations, while Pacific Energy will retain responsibility for day-to-day operations.

Construction of Woodfibre LNG will be undertaken under an engineering, procurement, fabrication and construction contract with McDermott International. McDermott President and CEO, Michael McKelvy, welcomed the partnership, saying, “The addition of Enbridge is a natural fit as we work together to build the smallest LNG export facility in emissions, the most sustainable and innovative in the world. Their proven commitment to enabling a new generation of sustainable energy solutions aligns directly with our goal of setting a new standard for efficient factory design.

BMO Capital Markets is acting as exclusive financial advisor to Pacific Energy Corporation on the transaction.

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