Pacific Energy and Enbridge Announce Partnership in Woodfibre LNG
Press Release-Enbridge Inc.
Pacific Energy Corporation Limited (Pacific Energy) and Enbridge Inc. (Enbridge or the Company) (TSX: ENB) (NYSE: ENB) today announced an agreement to jointly invest in the construction and operation of the Woodfibre LNG project.
Woodfibre LNG is a 2.1 million-tonne-per-year liquefied natural gas (LNG) export facility with 250,000M3 of floating storage capacity being built near Squamish, B.C. The project is underpinned by two long-term offtake agreements with BP Gas Marketing Limited for 15 years representing 70% of the capacity, with additional commitments in development for up to 90%. Woodfibre LNG announced in April that it had issued Notice to Proceed to global engineering and construction company McDermott International and that the project is expected to be in service in 2027.
Woodfibre LNG will use electric motor drives powered by renewable hydroelectric power, making this one of the lowest-emission LNG export facilities in the world. The project is the only one in Canada with a non-treaty Indigenous-issued environmental assessment certificate, the first project approved under the Government of Canada's "Five Principles" for environmental assessment, and has received all major federal, provincial and First Nations approvals.
"This partnership is a milestone for the Woodfibre LNG project," said Ratnesh Bedi, President of Pacific Energy," "and it further accelerates Canada's ability to be a meaningful player in the global energy transition with the production of the world's lowest carbon LNG."
"Enbridge is an accomplished North American energy company with substantial natural gas operations in B.C. and Woodfibre LNG is pleased that the companies have entered into this investment agreement," said Christine Kennedy, President of Woodfibre LNG. "We believe this agreement speaks to the credentials of the project, from our world-leading Indigenous partnerships to the incredible environmental due diligence, and the ambition of Woodfibre LNG to produce the lowest-emissions LNG in the world."
"As a leader in the energy transition, Enbridge is excited to participate in the Woodfibre LNG facility through this partnership," said Al Monaco, Enbridge's President and Chief Executive Officer. "This facility will provide global LNG markets with a safe, secure and sustainable source of B.C. natural gas through long-term transportation agreement on our T-South pipeline system. This investment is a natural extension of our export pipeline strategy, with strong commercial underpinnings.
"Expanding global access to natural gas through LNG will play a critical role in North America's energy future and will help to reduce the world's greenhouse gas emissions through the displacement of coal-fired power generation, creating strong alignment with our ESG goals," added Monaco.
Under the partnership agreement, Enbridge will invest in a 30% ownership stake in the $5.1 billion Woodfibre LNG project, with Pacific Energy retaining the remaining 70% stake in the facility. Capital for the project includes a contribution in aid of construction for the expansion of FortisBC Energy Inc.'s ("FortisBC") Eagle Mountain to Woodfibre pipeline which will connect the facility through FortisBC's system to Enbridge's T-South natural gas transmission system.
Pacific Energy and Enbridge will each make pro-rata contributions during construction through a combination of asset level financing and equity investments. In exchange for its capital contribution, Enbridge will receive a preferred equity interest that provides predictable future cash flows. The partners will jointly participate in project's execution and governance of ongoing operations, while Pacific Energy retains responsibility for daily operations.
Construction of Woodfibre LNG will be undertaken through an engineering, procurement, fabrication and construction contract with McDermott International. McDermott President and Chief Executive Officer Michael McKelvy welcomed the partnership stating: "The addition of Enbridge is a natural fit as we work together to build the lowest-emission, most sustainable and innovative LNG export facility in the world. Their proven commitment to enabling a new generation of sustainable energy solutions aligns directly with our goal to set a new standard for efficient plant design."
BMO Capital Markets is acting as exclusive financial advisor to Pacific Energy Corporation on the transaction.
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