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Canaport LNG Gets Final Green Light

The proposed Canaport LNG project in Saint John's, NB, took several significant steps forward last week as project sponsors Repsol YPF and Irving Oil awarded the onshore and offshore engineering, procurement, and construction (EPC) contracts, issued the final notice to proceed with construction and signed final agreements to transport gas from the terminal to U.S. and Canadian markets via the proposed Brunswick Pipeline and an expansion of Maritimes & Northeast Pipeline.

"With today's announcements, we take two big steps towards increasing the security of energy supply to the Northeastern region of North America and solidifying the New Brunswick energy hub," said Kenneth Irving of Irving Oil, regarding the EPC contract and decision to move forward with construction.

Site preparation, blasting and leveling construction work was completed earlier this spring at the Canaport site and the terminal is scheduled to begin operations in late 2008. At commissioning, the terminal will have a send-out capacity of 1 Bcf/d (10 Bcm/year), with a peak capacity of 1.2 Bcf/d. It will be expandable to 2 Bcf/d when the market is ready for additional natural gas supplies.

Phil Ribbeck, director of LNG in North America for Repsol, said pipeline transportation contracts with Maritimes and Emera ensure the completion of the project. They complete "the full value chain arrangements, and will enable our project to be first to market with secure natural gas supplies," he said.

The Maritimes expansion, which was filed with the Federal Energy Regulatory Commission last week, would more than double the pipeline's capacity, adding 418,000 Dth/d. It would include five compressor stations in Maine, 1.7 miles of 30-inch diameter pipeline and modifications to other existing U.S. facilities.

Meanwhile, Emera Inc., which owns Nova Scotia Power, Bangor Hydro-Electric and a 12.92% stake in Maritimes, said it will invest $350 million to build a 90-mile, 30-inch diameter pipeline lateral from the proposed LNG terminal through southwestern New Brunswick to a connection with U.S. portion of the Maritimes at the international border near Baileyville, ME.

The Brunswick Pipeline would be capable of carrying 850 MMcf/d of regasified LNG and its capacity can be expanded with added compression. The lateral requires National Energy Board approval. Construction of both the Maritimes expansion and the Brunswick lateral is expected to be completed by late 2008.

"The Canaport LNG regasification terminal in Saint John offers a new reliable source of natural gas and increases energy supply diversity and security for the region," said Maritimes President Doug Bloom. "This new supply source will help minimize the impact on consumers of disruptions brought on by events like last year's hurricanes." He also said the expansion would provide Maritimes' shippers with a "significant rate reduction.

"Canaport LNG could be the first LNG regasification terminal on the Atlantic coast to be constructed in decades and is a welcome development for energy consumers from New Brunswick to Maine, and New Hampshire to Massachusetts," said Bloom.

Emera has negotiated a 25-year send-or-pay toll agreement with Repsol to transport gas through the Brunswick Pipeline. Emera also has negotiated agreements with its Maritimes partner, Duke Energy, to have an affiliate of Duke continue its lead role in the Brunswick pipeline permitting process, and ultimately construct and operate the pipeline on Emera's behalf.

"This is a solid opportunity for Emera to grow its business with a quality project that builds on our investment in Maritimes," said Emera CEO Chris Huskilson. "LNG will play an important role in the energy security of the region, and will bring economic benefits. We are proud to be part of that."

The EPC contract for the onshore facilities and jetty topsides at the LNG terminal was awarded to SNC-CENMC GP, a partnership between SNC-Lavalin Inc., Canada's largest engineering and construction firm, and Saipem SpA of Milan, Italy. Kiewit-Weeks-Sandwell Partnership, a consortium of Saint John's-based Peter Kiewit Sons Co., New Jersey-based Weeks Marine, and Vancouver-based Sandwell Engineering were awarded the EPC contract for the terminal's offshore facilities, including the receiving pier.

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