Next wave of North American LNG export projects to address labor law challenges Ship’s crew

HOUSTON, July 10 (Reuters) – A forthcoming wave of North American liquefied natural gas (LNG) export projects is facing staffing issues, prompting some of the biggest developers to scale up training and coordinate projects to retain construction workers.

Eight export projects are currently underway which, when completed, would increase chilled natural gas capacity by 86 million tonnes per year (MTPA). The projects have already created thousands of construction jobs and will soon employ hundreds of operators.

Paul Marsden, head of Bechtel Corp.’s Energy global business, which has built 30% of the world’s LNG plants over the past 20 years, said industry, labor and education must work together to provide the training and manpower for all projects.

“Labor has become an inflationary problem for everyone in the industry. We need to actively predict and manage labor availability and the supply chain like never before,” Marsden said in an emailed interview last week.

In the past, rising construction costs for LNG projects in the US have hurt project economics and even led to the bankruptcy of a major contractor, said Alex Munton, director of consulting firm Rapidan Energy Group.

“We have several projects underway at the same time and four mega-projects, with the possibility of a fifth being announced soon, and they require the same type of manpower,” he said. “This will drive up labor costs, increase scheduling risks and create productivity issues.”

Bechtel is developing projects with approximately 27 MTPA of new capacity, including Sempra’s SRE.N Port Arthur LNG project and an expansion of Cheniere Energy’s Corpus Christi LNG.A facility. Another 29 MTPA are awaiting formal approvals to move forward.

WORKERS NEEDED

Bechtel currently employs more than 3,000 professionals working on its LNG projects. At its peak, the company expects the number to rise to nearly 20,000 skilled tradespeople, Marsden said.

Cheniere Energy, one of Bechtel’s largest customers and the largest LNG exporter in the US, has planned the construction so that it can move existing workers from the Corpus Christi expansion to its next project as it gets under way to ensure that no workers are lost. Two other projects — Golden Pass LNG and Plaquemines LNG — have hired new workers and are transitioning to 24-hour work schedules.

Cheniere has pre-ordered material for his newer Corpus Christi project to avoid inflation, Chief Operating Officer Corey Grindal said.

“We anticipate being able to move directly from Phase 3 to our further expansion, which is essentially on the same site. So we’re confident that with our contractor, Bechtel, we can keep our people,” Grindal said.

Cheniere and Bechtel train workers through virtual simulations or through partnerships with local schools.

Based in Kitimat in a remote corner of British Columbia, LNG Canada has invested more than CA$5 million (US$3.74 million) in education, including at local colleges, the company said.

There are few large facilities in the region, “so we’re trying to make sure we develop that workforce locally,” said Jason Klein, CEO of LNG Canada.

MODULAR DESIGNS

Some newer plants use modular and prefabricated components to avoid the inflationary pressures of a stick-build plant by outsourcing some of the construction work to countries with lower labor costs.

“We had more than 10,000 people on different farms in China at the same time, and that just wouldn’t be possible in Kitimat,” Klein said.

Commonwealth LNG, which hopes to get the financial green light for its first project by the end of the year, is also aiming for modular plant designs to reduce labor costs.

“The first Australian projects were $2,000 to $3,000 per tonne of production,” said CEO Paul Varello. “Our number is around $700 per tonne.”

Venture Global LNG has assembled 18 liquefaction units at its highly modular Calcasieu Pass LNG facility, opening the facility in record time. But equipment problems prevented delivery of contract cargo, the company said. First commercial loads will not be available until 2024, two years after processing begins.

(Reporting by Curtis Williams in Houston and Nia Williams in British Columbia, editing by Matthew Lewis)

(c) Copyright Thomson Reuters 2023.

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