Pieridae explores options after KBR pulls out of Goldboro LNG agreement

By Helen Murphy    
July 15 2020

GUYSBOROUGH – Pieridae Energy confirmed Monday that it has received written notice from Kellogg, Brown & Root (KBR) that the global engineering and construction firm “is no longer prepared to negotiate and conclude a lump sum turnkey engineering, procurement, construction and commissioning (“EPCC”) contract in relation to the proposed Goldboro LNG Facility.”

Pieridae’s July 13 news release said although “KBR has indicated they remain interested in providing the EPCC services for construction of the Goldboro LNG Facility, KBR’s decision to no longer provide a fixed price contract is in apparent contravention of its obligation under the terms of a signed services agreement dated March 27, 2019 made between Pieridae and KBR.

Reuters reported on June 22, 2020 that global engineering and construction firm KBR was getting out of “most of its liquefied natural gas (LNG) construction and other energy projects,” and focus on government contracts and technology businesses. The story quoted Chief Executive Stuart Bradie telling employees the company would “no longer engage in lump sum, blue collar construction services. The move was accelerated, he said, by the COVID-19 pandemic.

“With this notice from KBR, we are looking at all of our options, including discussing the matter with legal counsel to determine the most appropriate next steps,” said Pieridae CEO Alfred Sorensen. “There are other reputable and experienced firms who have the expertise to provide these services, with some already indicating a willingness to replace KBR. We have had discussions with several of them to gauge their interest.”

Pieridae’s release says the “Goldboro LNG Project remains solid with many key elements in place: the majority of key permits, a 20-year contract with German energy company Uniper Global Commodities to buy half of Goldboro’s gas, confirmation of eligibility in principle of an untied loan guarantee of up to US$4.5 billion from the German Government, a signed benefits agreement with the Nova Scotia Mi’kmaq, and Pieridae has the majority of the gas needed, when developed, to supply Goldboro’s Train 1.”

Uniper recently agreed to extend key deadlines in the agreement, including making a final investment decision on the Goldboro LNG Facility by June 30, 2021, the release said. “Concurrently, Pieridae continues to take further tangible steps to advance the project as we design and plan core owner infrastructure projects such as the highway re-alignment around the LNG Facility site; construction of a large-scale work camp; building key marine facilities for LNG offloading; and, facility site terracing.”

Reached by email Tuesday, Director External Relations James Millar told The Journal the company is "planning and designing for work to potentially begin this fall should we receive some Government of Canada financial support to fund these initiatives as part of shovel worthy projects to put Canadians, especially Atlantic Canadians, back to work following the severe economic impacts of COVID-19."