Thousands of Nova Scotia construction workers are at the starting gate ready to get to work as Pieridae Energy edges closer to giving the go-ahead to its proposed $10-billion-plus liquid natural gas (LNG) project targeted for Goldboro, in the southeast of the province.
The project owner has been proceeding steadily for six years obtaining permitting, securing natural gas suppliers, signing long-term customers, confirming financing, negotiating labour agreements with 13 different Nova Scotia construction trade unions, keeping tabs on the LNG market and preparing construction plans to achieve cost certainty.
Everything is just about in place now.
Mark Brown, Pieridae’s director of project development, said the firm is ready to make a soft final investment decision (FID) as early as the end of the third quarter of this year and a hard FID near the end of the first quarter next year.
“You don’t invest $10 billion lightly,” said Brown, noting one or two issues remain to be resolved. “It’s been a long time coming and there has been a lot of moving parts.”
The main build will be a two-train liquefaction facility that will transform natural gas into a liquid. Other projects include construction of storage tanks that can hold 690,000 cubic metres of LNG, marine berths, a jetty, a material offloading facility, power plant, local pipe infrastructure, site buildings and a camp that will accommodate 2,500 workers. The send-out capacity will be 10 million tonnes of product per year.
It’s anticipated that 3,500 workers — representing over 30 per cent of Nova Scotia’s total unionized trades labour force of 11,000 — will be given work. The start date would be in 2019 and the project would wrap in 2023.
“It’s a big works kind of thing,” said Brown. “There is going to be a lot of work in a 48-month construction cycle.”
There will be some modular work done off site, but mostly it will be stick built, he said, explaining the large onsite labour requirement.
A May 2018 Pieridae corporate report puts the estimated cost at $10.8 billion. Brown said $90 million has been spent so far in the first six years on project planning including obtaining numerous permits — both a National Energy Board export permit and a US. Department of Energy export permit were required, among many others. But the bulk of the costs will be in construction labour and steel, he said.
“When we get into steel and labour, that is when the big numbers come in,” he said. “The labour alone is 40 per cent of the cap ex. That is a big labour bill. Understandably, it’s a union site, but at peak there will be 3,500 trades there.”
Brown pointed out the current softness in the natural gas sector after the worldwide peak of 2012-2018 has made labour costs more affordable.
“When it was peak construction and they were paying camp cooks in eastern Australia $250,000 a year, that is significant,” he claimed.
Last May Pieridae announced a Special Needs Collective Agreement under the provincial Construction Projects Labour Relations Act with 13 of 15 trades signing on, representing 85 per cent of the building trades expected to be involved in construction.
“We have a good understanding of the scope of the work and the trades required and are confident we are able to supply the skilled trades,” commented Brad Smith, executive director of the Mainland Building Trades.
“This project will be focused on the local supply but we have the ability because of the national networks to bring others in as required, on the peaks.”
Smith’s organization has eight training centres across the province including a new 66,000-square-foot multi-trade facility in Halifax where workers are currently prepping for the Pieridae build.
Specialty trades have gained experience elsewhere including Western Canada, Smith said. At any given time, 15 per cent of the province’s trades are working out of province.
“Many of those workers would welcome the opportunity for steady work closer to home,” said Smith.
Natural gas will be sourced from Western Canada (60 per cent), Eastern Canada and the U.S. northeast. Existing pipelines including the TransCanada mainline will deliver western gas, connecting to the Maritimes and Northeast pipeline that passes within several hundred metres of Pieridae’s Goldboro property.
Brown said the FID will come when final contracts are signed on the supply side, and then financing will be ensured. There are also a couple of permitting issues that should be resolved over the next six months.
As for customers, Pieridae has locked up the German firm Uniper to a 20-year contract worth $45 billion. The German government has committed to a loan guarantee of $3.8 billion. The product will be shipped from Goldboro in liquified form at -160 C in vessels with 260-cubic-metre capacity to Germany where it will be regasified and piped to consumers.
Brown said another European customer is close to signing on as well.