Provincial government support for liquefied natural gas (LNG) export projects has leaped east across Canada to Nova Scotia from British Columbia, according to evidence before the National Energy Board (NEB).
The sustainability of Nova Scotia's own supplies is becoming tied to plans for Atlantic Coast terminals that would import shale gas production from the United States for re-export overseas, said the provincial energy department.
Hope for LNG traffic to prop up domestic supply and economic development prompted the department to endorse long-term gas export license applications to the NEB by both of two projects in the Halifax region: Bear Head LNG and Goldboro LNG.
Bear Head, owned by Australian global merchant Liquefied Natural Gas Ltd., seeks a permit to ship out 1.6 Bcf/d. The sponsor also has the Magnolia LNG project in Louisiana.
Goldboro, proposed by Canadian dealership Pieridae Energy Ltd., aims to load tankers with up to 1.4 Bcf/d. The firm's founders turned to Nova Scotia from BC after selling KM LNG, the first entry in the 19-project lineup to build terminals on the Pacific Coast.
In support letters for both projects to the NEB, the Nova Scotia Department of Energy said they have "potential to underpin infrastructure to enable large volumes of natural gas to flow to Nova Scotia for both the domestic as well as LNG export markets. This will mean an opportunity for increased security of supply and liquidity in natural gas markets served by Maritimes and Northeast Pipeline [MNP] including Nova Scotia."
The outlook for gas on Canada's Atlantic seaboard has lately turned foggy, with both of the region's offshore production platforms running down.
The aging pioneer Atlantic gas wells in the Sable Offshore Energy Project have depleted to about one-fifth of their original output exceeding 500 MMcf/d, with no new drilling in sight.
The younger Deep Panuke platform shut down as of mid-May, with owner EnCana Corp. setting a fall 2015 target for restarting but making no promises. Subterranean water flows blocked the wells after causing a 50% cut in forecast reserves to 200 Bcf.
The offshore setbacks followed a 2014 decision by the provincial government to prohibit the use of horizontal drilling and hydraulic fracturing to crack open shale deposits. The decision followed an inquiry that documented popular, environmental, aboriginal and academic disdain for the advanced gas exploration and production technology.
The provincial energy department, in endorsing the Bear Head and Goldboro terminal projects, said LNG exports "should also serve to grow interest in natural gas exploration and development in offshore Nova Scotia.
"Renewed commercial interest in offshore Nova Scotia gas will only occur if offshore natural gas is able to access LNG export markets. Without the LNG export projects, it is unlikely that Nova Scotia will see any new offshore gas development in the near future."
Canadian project sponsors and industry analysts rate Atlantic Coast LNG terminal proposals as liable to proceed more easily than the Pacific lineup. Unlike BC plans, the Nova Scotia export schemes do not require multibillion-dollar new production and pipeline developments to connect untapped shale supplies with terminal sites across 1,600 kilometers (1,000 miles) of formidable hills, muskeg swamps, mountains, rainforests and demanding aboriginal communities. The International Energy Agency recited the cost and competitive marketing odds against rapid successes in BC in a global gas outlook report this week, echoing doubts voiced by Canadian industry skeptics.
On the Atlantic seaboard, MNP has yet to declare official intentions to convert into an export terminal supplier from being a delivery route into the northeastern U.S. for Nova Scotia offshore gas and New Brunswick LNG imports.
But the switch is widely expected among eastern Canadian industry, government and academic agencies. The conversion is regarded as a natural step, eventually, for a pipeline with nearly 90% of its capacity for 800 MMcf/d of gas booked by Repsol. The Spanish conglomerate is seeking a long-term license from the NEB to convert its Canaport LNG import terminal in New Brunswick into an export outlet for a mixed stream of 700 MMcf/d of Canadian and U.S. gas.