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Pieridae Energy says engineering company seeking exit from Goldboro LNG deal

Alfred Sorensen, president of Pieridae Energy Canada attends a news conference in Halifax, on Wednesday, Oct. 24, 2012. THE CANADIAN PRESS/Andrew Vaughan. THE CANADIAN PRESS/Andrew Vaughan

Pieridae Energy Ltd. says the engineering company it hired to build its proposed Goldboro LNG export facility in Nova Scotia is withdrawing from an agreement to provide a fixed price contract for the job.

The Calgary-based company says it has received written notice from Kellogg Brown & Root Ltd. that it is no longer prepared to enter into a lump-sum turnkey engineering, procurement, construction and commissioning contract for the project as agreed in March 2019, although it is willing to provide the services on other terms.

Read more: Shell, Pieridae to try again after Alberta Energy Regulator blocks licence transfers

Pieridae CEO Alfred Sorensen says the company is considering options including legal action in response, but has already had discussions with other firms willing to replace KBR.

In May, Pieridae announced a delay in making a final decision on proceeding with the project to export liquefied natural gas from Canada’s East Coast, citing technical obstacles created by COVID-19.

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Also in May, the Alberta Energy Regulator put Pieridae’s natural gas supply in question when it refused to transfer licences for production assets purchased from Shell Canada because the application would have split liabilities for cleaning up the sites, especially two gas-processing plants. (Shell and Pieridae are trying to work with the AER to win approval.)

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Sorensen says the project is “solid”, however, with most of its key permits in hand, a 20-year contract with a German energy company to buy half of the LNG and a potential loan guarantee from the German government.

“There are other reputable and experienced firms who have the expertise to provide these services, with some already indicating a willingness to replace KBR,” said Sorensen in a news release. “We have had discussions with several of them to gauge their interest.”