Daily GPI / NGI All News Access / Liquefied Natural Gas (LNG)

Two More Projects Join Canadian LNG Export Race

Spanish and Chinese sponsors stepped forward Wednesday with two fresh entries into the lineup to export liquefied natural gas (LNG) from Canada, increasing the number of terminal projects on both sides of the country to 25.

On the Atlantic Coast, Repsol SA confirmed intentions to convert its six-year-old, little-used New Brunswick import terminal at Saint John, Canaport LNG, into an export site.

A new subsidiary of the Spanish energy conglomerate, Saint John LNG Development Co., filed an application to the National Energy Board (NEB) for a 25-year license to ship out 6.8 Tcf of gas at a rate of up to 785 MMcf/d.

On the northern Pacific Coast of British Columbia, a private Vancouver arm of New Times Energy, a Hong Kong international gas merchant, filed for a 25-year NEB license to export 14 Tcf in tanker cargoes of up to 1.6 Bcf/d.

New Times also disclosed plans for an economy model terminal, using floating liquefied natural gas (FLNG) production vessels moored to a dock in the Prince Rupert area rather than build a permanent plant.

Repsol’s subsidiary seeks both import and export licenses for a potentially blended flow of gas supplies from the United States as well as Canada.

Production could reach the Saint John site from Alberta, BC, and the Marcellus Shale formation in the U.S. via a variety of interconnected Canadian and U.S. pipeline systems, the NEB filing says.

No possibilities were raised for using central or eastern Canadian counterparts to the Marcellus structure. Producers are locked out of Quebec, New Brunswick and Nova Scotia by moratoriums against fracking wells into their shale formations. The provinces enacted bans over the past two years after inquiries and polls recorded high levels of popular fear and environmental disdain of the advanced gas- and oilfield technology.

Neither Repsol nor New Times disclosed cost projections for their LNG export proposals. Industry analysts have estimated the price tag for the Canaport conversion alone to be US$2-4 billion, depending on the extent of installations such as new pipeline links that might be needed, possibly including eventual reversals of flows on the Maritimes & Northeast Pipeline built 15 years ago for exports from Canadian production platforms offshore of Nova Scotia across New Brunswick to the northeastern United States.

Like all other entries in the long LNG lineup in Canada, the two new projects also did not identify prospective overseas customers. Repsol’s plans are widely interpreted to focus on competing against Russia for western European markets. The Canaport site was the only property that the Spanish firm kept out of a 2013 sale of its international LNG network to Royal Dutch Shell. New Times indicates it aims to break into Asia with LNG from Canada but says that potential sales -- like BC gas supply sources and pipelines -- remain in discussion stages with cross-sections of the industry sectors.

The two new entries in the Canadian LNG lineup increase the collective volumes of gas that aspiring exporters hope to sell overseas over a quarter-century to 427 Tcf at a combined rate of 45 Bcf/d.

The NEB has granted export licenses to 12 terminal projects hoping to sell a total of 230 Tcf of shale reserves overseas at a combined rate of 23 Bcf/d. The board continues to work through formal processing of license applications by the other 13 LNG schemes.

The new filings acknowledge that the outcome of the race to break into the overseas LNG trade will fall far short of the astronomical total ambitions of the project lineup.

“The demand for LNG exports will be limited,” predicts a supply and markets study that New Times commissioned to support its NEB application from General Information Technology Inc. (GIT), a consulting firm based in McLean, VA.

“At the end of the day, price is all that matters for buyers. North America does not have a dominant advantage geographically or in production cost,” says GIT. “So far, there are no big buyers who have committed to purchase LNG from Canada yet. We are sure that they will come eventually if the price is right...but [they] will not flood in.”

Although Canadian dry gas exports fell from 3.8 Tcf in 2007 to 2.9 Tcf in 2013, the country has actually become even more dependent on foreign markets for its gas supplies over the last few years, at least on a relative basis. Between 2007 and 2013, exports accounted for 57% to 63% of total Canadian dry gas production, compared to 55% to 58% for the years between 2000 and 2006, according to data from the Energy Information Administration. However, the 56.8% export-to-production ratio in 2013 was more in line with recent historical norms.

Recent Articles by Gordon Jaremko

Comments powered by Disqus