A new path overseas is taking shape through Canada for shale gas from the United States, the National Energy Board (NEB) acknowledged in granting an Atlantic coast liquefied natural gas (LNG) trading license.

The NEB authorized Saint John LNG Development Co., a subsidiary of Spanish energy conglomerate Repsol SA, matching import and export licenses for its Canaport tanker terminal in New Brunswick at Saint John.

A condition on the 25-year license for incoming and outgoing gas traffic of up to 850 MMcf/d specifies that the import path must be the Maritimes & Northeast Pipeline (MNP) unless the NEB decides to accept a different route.

The board crafted the condition in response to interventions by the Nova Scotia government and regional distribution company Heritage Gas. The province and the distributor sought access to U.S. production as a way to replace depleting offshore wells and eventually stimulate a gas development revival in the Atlantic region.

Repsol-Saint John LNG did not oppose the condition. The international trading house assured the NEB this summer that work is progressing on importing gas from the U.S. by reversing flows on MNP as exports from Canada taper off on the 15-year-old pipeline (see Daily GPI, June 19).

An open season of potential northbound delivery capacity was under way on U.S. legs of the pipeline across New England, New Brunswick and Nova Scotia. The Repsol organization holds nearly 90% of current MNP delivery capacity for 800 MMcf/d.

Like all other sponsors of 25 LNG export proposals on the Pacific and Atlantic coasts of Canada, the Saint John project has kept its options open. Canaport could deal in mixed U.S. and Canadian production that would reach the terminal via an array of routes to MNP’s conduit across the border, the NEB was told.

No regulatory deadline or corporate target date has been set for tanker voyages to begin from Canaport, or for its proposed conversion from an import site to an export terminal for undisclosed costs estimated by Canadian analysts to run into the range of C$2-4 billion ($1.5-3 billion).

In the ruling on Repsol-Saint John LNG, the NEB repeated a cautious forecast that recurs in all of its decisions to grant licenses to export sponsors.

“All of these LNG ventures are faced with a robust, but limited, global market and face numerous development and construction challenges,” NEB stated.

The board pointed out that Saint John LNG’s license application “cites several factors that could limit Canadian LNG export volumes including: significant capital costs; consolidation within Canadian LNG projects; global competition; and significant environmental and regulatory requirements.”