LNG Canada has announced it has selected a joint partnership of companies to design and build its Cedar Valley Lodge - a 4,500-person work camp that would be more like an instant town than a typical mancamp.
Under a joint venture, Bird Construction Inc, (TSX:BDT) and Civeo Corp. (NYSE:CVEO) will begin designing the lodge, which would have a total floor space of 1.2 million square feet. It would feature a communal kitchen, a medical clinic and fitness centre.
But whether the facility ever gets built will depend on Shell making a final investment decision – something that has been put in question this week with the release of Shell’s first quarter earnings.
“Construction on Cedar Valley Lodge will not commence unless LNG Canada’s joint venture participants have made a positive Final Investment Decision,” LNG Canada said in a press release. “In the interim, Bird-Civeo will advance engineering and planning work for the centre.”
In a first quarter conference call earlier this week, Shell CFO Simon Henry confirmed the final investment decision, which was expected this year, may not come.
Faced with plunging profits from low oil prices, and debt from it US$54 billion acquisition of BG Group, Henry said the company may have to defer two or three of the major projects it has in the pipeline.
Shell posted an 83% drop in first quarter earnings, down from US$4.8 billion in Q1 2015 to US$0.8 billion in Q1 2016, according to its Q1 2016 financials.
Shell earlier announced capital spending reductions of US$30 billion for 2016, and has since announced it will reduce capital spending this year even further.
Shell has four major projects in the pipeline, including LNG Canada, which has been estimated to cost US$40 billion to US$50 billion. Shell planned to make final investment decisions on those projects sometime over the next 12 months.
Another project is a chemical plant in Pennsylvania, and Henry said that one may be favoured for an FID.
“It's highly unlikely that more than, I would say two, maybe only one… will actually go ahead in that timeframe,” Henry said in a conference call.
“The chemicals plant is probably the first one because of the timing of certain commitments that are already in place. It's an excellent project.”
