Impact of COVID-19 Pandemic on Major Fossil Fuel Projects

From Global Energy Monitor
This article is part of Global Energy Monitor's coverage of the COVID-19 pandemic.

This page lists fossil fuel projects such as power plants, pipelines, mines, terminals, and other major parts of the fossil fuel economy whose development or sale has been affected by the COVID-19 pandemic that was declared by the World Health Organization in March 2020.[1]

Oil and gas pipelines

Canada

On March 17, 2020, it was announced that pipeline construction work on the Coastal GasLink Pipeline was being scaled back with the number of construction workers being reduced as a precautionary measure in response to the COVID-19 outbreak.[2]

United States

Pennsylvania

Construction of the West Loop Project, a 150 million cubic foot per day natural gas pipeline, was halted on March 25, 2020, as a result of Pennsylvania ordering all non-life-sustaining businesses to cease operations as a result of the COVID-19 pandemic.[3]

LNG terminals

Australia

On March 6, 2020 a report by EnergyQuest found that the Scarborough LNG Terminal, being promoted by Australia's biggest oil and gas exporter Woodside Petroleum and planned for 2024, could be delayed as a result of the impact of COVID-19 on travel, trade, energy prices, and gas companies. The proposed export terminal is located in Onslow, Western Australia and planned to have a capacity of 7 million tonnes per annum.[4] With the impacts of the coronavirus continuing to roil oil and gas markets, comments on March 11 from a senior executive of Woodside have intensified speculation that there will be delays for the Scarborough project as well as the company's larger, US$20.5 billion Browse LNG Terminal project which would neighbour Scarborough.[5] Reinforcing the point, the ratings agency Standard & Poor's warned of a likely downgrade to Woodside's credit rating in the next month or so: "We may lower the rating by at least one notch if Woodside is unwilling to take effective and timely actions to preserve its financial profile amid the significantly depressed oil and LNG markets and funding requirements associated with the Scarborough-Pluto LNG project".[6] On March 27, Woodside announced that it was delaying the final investment decisions for both the Scarborough LNG Terminal and the Browse LNG Terminal as well as for the expansion of its existing Pluto LNG project. These decisions, accounting for an estimated US$32 billion in project development, had been earmarked to take place in 2020. The company also announced that its capital expenditure plans for 2020 are being cut by 50%.[7]

Canada

In March 2020, the owners of LNG Canada Terminal in Kitimat, British Columbia, announced a reduction of half the terminal's workforce as a precautionary measure against the Coronavirus and to help local communities deal with the outbreak. The cuts are being made to construction workers flying in on rotation though could be extended to cutting back staff numbers to levels required for only maintaining site security and environmental controls.[8]

On March 25, 2020, a spokesperson for Woodfibre LNG Terminal informed that construction work planned to commence in summer 2020 has been pushed back until mid-2021 due to the impacts of the COVID-19 pandemic, chiefly because an Asian supplier making components for the project has been shut down to hinder the spread of the coronavirus. Construction delay has also become necessary because the preferred U.S. construction contractor for the marine part of the project has filed for Chapter 11 bankruptcy protection in the United States and won't be available to start work as expected.[9]

On March 30, 2020, Canadian company LNGL announced that its potential sale to Singaporean company LNG9 would be delayed by Covid-19 related logistical problems with developing the 8-mtpa Bear Head LNG Terminal in Nova Scotia.[10]

On April 16, 2020, Pieridae Energy announced that a final investment decision (FID), planned for autumn 2020, for its estimated US$16 billion Goldboro LNG Terminal in Nova Scotia will be delayed due to depressed global LNG markets and the COVID-19 pandemic. The company's CEO Alfred Sorensen added that it is now in negotiations with German energy company Uniper to extend the FID deadline to June 2021. Moreover, the company is continuing to lobby federal and provincial governments in Canada for financial help to build the terminal, and is seeking approximately CAN$1 billion in public handouts.[11]

India

In April 2020 the Covid-19 pandemic led the state of Odisha to order a temporary shutdown of many business and constructions sites including the Dhamra LNG Terminal.[12] The 12-mtpa terminal is scheduled for completion in mid-2021.

Indonesia

In March 2020 Indonesia's upstream regulator the Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) announced that construction of the third train at the Tangguh LNG Terminal would be delayed because of the COVID-19 pandemic. Physical distancing has been established among workers at the site, leading to a decline from 13,000 workers to 10,000 workers in the third week of March, with plans to reduce on-site workers further to a core group of 3,000.[13] The 3.8-mtpa expansion to the 7.6-mtpa terminal was originally scheduled to be commissioned in Q3 2020 but was delayed to Q3 2021 because of two tsunamis in 2018.[13]

Mozambique

On March 21, 2020, it was reported that disruption to construction workers as a result of the COVID-19 Pandemic combined with a heavily deflated global gas market will delay the final investment decision (FID) on Exxon Mobil's US$30 billion Rovuma LNG Terminal project in Mozambique. The FID had been expected to take place in the first half of 2020 and, according to various sources familiar with the project, the most optimistic scenario is for the project to receive formal go-ahead in the second half of 2020. One of these sources said: “COVID-19 is affecting guys going into Mozambique, it’s affecting Chinese and Korean financiers, and clearly you’ve had the arse drop out of the oil market”. Exxon itself is considering substantial cuts to its capital spending plans and operating expenses in the initial fall-out from the COVID-19 outbreak and the related shocks to global commodities markets.[14] On April 16, 2020, it was reported that Rovuma LNG construction site had been shut down and quarantined due to COVID-19 infections among workers.[15]

Nigeria

On April 2, 2020, Nigeria LNG announced that construction of the US$10 bilion Train 7 at the Nigeria LNG Terminal would be delayed until Q3 2020 due to the COVID-19 pandemic.[16]

Papua New Guinea

According to the energy and shipping brokerage Poten & Partners, as of April 2020 final investment decisions for the Exxon Mobil-led Papua New Guinea LNG Terminal and Exxon and Total's Papua LNG Terminal have been delayed for reasons attributable to COVID-19, plunging demand and the crash in oil prices.[17]

Qatar

In April 2020 it was announced that commissioning of the first two trains at the Qatar North Field LNG Terminal has been delayed until 2025 due to logistical and economic problems caused by the Covid-19 pandemic.[18]

Russia

On April 2020 Novatek announced a 14-day shutdown of construction on the Arctic LNG 2 Terminal due to 367 workers testing positive for Covid-19.[19] The terminal may also be delayed due to Covid-19-related work stoppages and shortages at Jiangsu China Nuclear Industry Libert (LBT) which is building the terminal's main modules.[19]

United States

In March 2020 Sempra spokesperson Katherine Hill said that "far fewer" workers were actively working on the expansion of the Cameron LNG Terminal due to COVID-19 and resulting restrictions on large gatherings.[20] Cameron LNG Terminal is a liquefied natural gas (LNG) receipt terminal situated on a 260-acre industrial-zoned site along the Calcasieu Channel in Hackberry, Louisiana.

The future of the proposed Magnolia LNG Terminal in Louisiana, reported S&P Global on March 27, is "in jeopardy" due to factors including the coronavirus pandemic. Bridge financing, to permit the Australian promoter LNG Limited to continue operating until a proposed US$75 million takeover by a Singaporean investor takes place, has fallen through, leaving the company scrambling to arrange short-term financing after First Wall Street Capital Corp. pulled out of a finance package agreement. Magnolia LNG does not have any confirmed offtake agreements with LNG importers and efforts to secure these are being directly hampered by the coronavirus as well as by deteriorating LNG market conditions which the global pandemic has made worse.[21] On May 1 it was announced that, alongside the resignation of four of its directors, LNG Limited's mounting financial problems had resulted in the calling in of administrators PriceWaterhouseCoopers to review its assets, casting further doubts on the company's proposed Magnolia LNG Terminal and its Bear Head LNG Terminal in Nova Scotia, Canada.[22]

In late March, Sempra Energy pulled back from its previous intention to reach a final investment decision on the Port Arthur LNG Terminal project in the third quarter of 2020 owing to unfavourable LNG market conditions which have been exacerbated by the coronavirus pandemic.[23] In May 2020 Sempra announced that it would delay FID for the terminal to 2021.[24]

According to the energy and shipping brokerage Poten & Partners, as of April 2020 final investment decisions for a further eight U.S. LNG terminal projects have been delayed for reasons attributable to COVID-19, plunging demand and the crash in oil prices: Corpus Christi LNG Terminal (Train 3), Rio Grande LNG Terminal, Driftwood LNG Terminal, Freeport LNG Terminal (Train 4), Plaquemines LNG Terminal, Lake Charles LNG Terminal, Annova LNG Brownsville Terminal and Commonwealth LNG Terminal.[17]

Vietnam

On March 27, 2020, it was reported in Asia Times that the COVID-19 outbreak was jeopardising a string of major foreign investments being planned for Vietnam's LNG sector. Vietnamese energy industry sources revealed that energy deals between foreign energy companies and provincial governments in Vietnam are likely to be delayed for at least six months and potentially up to a year. Currently Vietnam has at least six major LNG import terminals in planning, with the Thi Vai LNG Terminal already under construction since October 2019.[25]

Natural Gas Fields

In April 2020 Qatar Petroleum announced that it was delaying development of the North Field LNG Expansion project until 2025 due to Covid-19-related logistical problems. Qatar Petroleum plans to increase production at the field to 110 mt/year from 77.5 mt/yr via the construction of four new trains.[26]

Floating Liquefied Natural Gas Terminals (FLNG's)

Mauritania and Senegal

On April 7, 2020, a division of British Petroleum declared force majeure due to delays caused by the Covid-19 pandemic and announced a one-year delay in delivering the Greater Tortue Ahmeyim FLNG. The 2.5 mtpa terminal is jointly owned by the government of Mauritania and Senegal and is now scheduled for completion in 2023.[27]

Floating Production Storage and Offloading facilities (FPSO's)

Australia

On April 8, 2020 Santos announced that it was suspending development of the Barossa-to-Darwin natural gas project due to Covid-19-related difficulties with assembling work crews and the collapse in fossil fuel prices. The FPSO part of the project was designed to produce 600 million cubic feet of gas per day and store up to 650,000 barrels of condensate, and was scheduled for deliver in 2023.[28]

India

On May 7, 2020, Hardy Exploration & Production India (HEPI) announced that it was delaying until mid-June the tender submission date for its floating production vessel required for the PY-3 field in the Cauvery basin off India’s east coast.[29]

Offshore Drilling Platforms

Australia

On April 20, 2020 Beach Energy issued a termination notice to Diamond Offshore for its year-long offshore drilling program in the Otway basin with the semi-submersible Ocean Onyx, citing the logistical difficulties caused by the Covid-19 pandemic.[30]

Fracking projects

Argentina

On April 22, 2020, the Argentinian government acknowledged it was putting on hold policies and incentives designed to increase oil production from the Vaca Muerta shale play due to excessive levels of global oil supplies resulting from the coronavirus pandemic.[31] Argentina has some of the largest natural gas and oil reserves in the world. A fracking boom centred around Vaca Muerta shale in northern Patagonia, which has only had four percent of its acreage developed thus far, is a centrepiece of current president Alberto Fernandez's policy programme.[32] Global oil majors have flocked to Vaca Muerta in recent years to begin exploration activities. In an April 2 article entitled 'Oil crash kills Vaca Muerta’s potential as the next shale hotspot', World Oil described the harsh new economic realities facing such ventures as a result of the oil price crash, quoting a Bloomberg Intelligence energy analyst: “They were in a place where they were drawing significant interest in the region because it was one of the better resources globally, but that’s falling apart.”[33]

Australia

On March 26, 2020, citing "the unprecedented circumstances brought about by COVID-19," Origin Energy announced that it is suspending shale exploration drilling at its Kyalla well site in Australia's Northern Territory until the second half of 2020.[34]

United States

On April 9, 2020, it was reported that JPMorgan Chase, Wells Fargo, Bank of America and Citi are preparing to set up independent companies in order to take direct ownership of oil and gas companies in the debt-stricken US shale sector. According to Reuters, Whiting Petroleum Corp became the first producer in the sector to file for Chapter 11 bankruptcy on April 1, and others, including Chesapeake Energy Corp, Denbury Resources Inc and Callon Petroleum Co, have also hired debt advisers. The U.S. shale sector was already highly leveraged before the coronavirus outbreak and is estimated to owe more than US$200 billion to lenders. Raystad Energy has predicted that more than 70 upstream U.S. oil and gas operators are likely to go bankrupt this year. The bank moves are expected to take several months to set up, and will require regulatory waivers due to current legal limitations on the banks' involvement with physical commodities.[35][36] In reaction to this development, the Stop the Money Pipeline coalition warned that the four Wall Street banks, renowned as the four largest global bankers of fossil fuels, are lining up efforts to move oil and gas companies back into profitability, likely by taking advantage of federal bailout money that should go to working families. According to the coalition, the only possible justification for taking an ownership stake in an oil and gas company would be to immediately begin winding down production and retiring existing assets, while taking care of workers by providing full benefits and pension guarantees.[37]

Coal

For coal plants, coal terminals, and coal mines and exploration affected by the coronavirus, see Coal and Coronavirus

Resources and articles

References

  1. Jaime Gumbrecht and Jacqueline Howard, WHO declares novel coronavirus outbreak a pandemic, CNN, Mar. 11, 2020
  2. "Wet’suwet’en hereditary chiefs postpone all-clans meeting," The Globe and Mail, Mar. 17, 2020.
  3. Maya Weber, Pennsylvania's orders to stem coronavirus outbreak pause several gas pipeline projects, S&P Global Platts, Mar. 25, 2020
  4. COVID-19 could delay major LNG projects, Business News, Mar. 6, 2020
  5. Woodside's 'hard look' casts more doubt on LNG projects, The Australian Financial Review, Mar. 11, 2020
  6. Hunkering down: Santos delays $7b project, slashes spending, The Australian Financial Review, Mar. 23, 2020
  7. $32 Billion In Australian Oil And Gas Work Deferred Till Markets Improve, Forbes, Mar. 27, 2020
  8. LNG Canada says it's cutting its workforce in half to protect local communities from COVID-19 Vancouver Sun, Mar. 18, 2020
  9. COVID-19 pandemic leads to delay of Woodfibre LNG project CBC News, Mar 25, 2020
  10. Takeover of Magnolia, Bear Head LNG Developer Likely Delayed Due to Covid-19, Natural Gas Intelligence, Mar. 30, 2020
  11. Nova Scotia LNG project decision delayed due to market conditions, COVID-19 Bloomberg, Apr. 16, 2020
  12. India's Odisha state extends Covid-19 lockdown, Argus Media, Apr. 9, 2020
  13. 13.0 13.1 Damon Evans, Virus looks set to delay BP’s Tangguh LNG expansion, Energy Voice, Mar. 30, 2020
  14. Exclusive - Coronavirus, gas slump put brakes on Exxon's giant Mozambique LNG plan Reuters, Mar. 21, 2020
  15. Iaian Esau, Entire Afungi LNG site in Mozambique under lockdown, Upstream Online, Apr. 16, 2020
  16. Iaian Esau, Nigeria LNG Train 7 heads for further delay Upsream Online, Apr. 2, 2020
  17. 17.0 17.1 John Snyder FID’s delayed by global uncertainty Riviera Maritime Media, Apr. 24, 2020
  18. Qatar Petroleum delays start-up of North Field LNG expansion due to COVID-19, S&P Platts Global, Apr. 7, 2020
  19. 19.0 19.1 Vladimir Afanasiev, Hundreds of Arctic LNG 2 builders struck down with Covid-19, Upstream Online, Apr. 21, 2020
  20. Slowdown in construction of new North American liquefaction supply expected amid outbreak, S&P Platts Global, Mar. 17, 2020
  21. LNG Limited's required financing to stay afloat falls through, S&P Platts Global, Mar. 27, 2020
  22. The Offtake: LNG in Brief, Natural Gas Intel, May. 1, 2020
  23. Scott DiSavino and Shradha Singh, Sempra confirms decision on Mexico LNG project, may delay decision on Texas plant Reuters, March 24, 2020
  24. Caroline Evans, Sempra delays Port Arthur LNG decision to 2021, Upstream Online, May 4, 2020
  25. Covid-19 knocking the lights out in Vietnam, Asia Times, Mar. 27, 2020
  26. Qatar Petroleum delays start-up of North Field LNG expansion due to COVID-19, S&P Platts Global, Apr. 7, 2020
  27. BP issues force majeure to Golar over Tortue Ahmeyim LNG project, Reuters, Apr. 7, 2020
  28. Xu Yihe and Josh Lewis, Santos suspends Barossa work as Covid-19 bites, Upstream Online, Apr. 8, 2020
  29. Nishant Ugal and Xu Yihe, Indian east coast floater tender delayed as Covid-19 bites, Upstream Online, May 8, 2020
  30. Russell Searancke, Aussie operator cancels offshore drilling contract, Upstream Online, Apr. 20, 2020
  31. Charles Newbery, Argentina puts on hold policies for ramping up shale oil production, S&P Global, Apr. 22, 2020
  32. Nick Cunningham, Argentina Wants a Fracking Boom. The US Offers a Cautionary Tale, Desmog, Dec. 12, 2020
  33. Jonathan Gilbert, Oil crash kills Vaca Muerta’s potential as the next shale hotspot, WorldOil, Apr. 2, 2020
  34. Origin defers shale drilling in northern Australia until second half, Reuters, Mar. 26, 2020
  35. David French, Imani MoiseExclusive: U.S. banks prepare to seize energy assets as shale boom goes bust, Reuters, Apr. 9, 2020
  36. Heavily indebted US upstream industry on track for record number of Chapter 11 filings 2020, Raystad Energy, Apr. 3, 2020
  37. Private Banks Owning Oil Companies Is A Recipe for Disaster, Stop the Money Pipeline, Apr. 9, 2020