Eastern Canada is rolling out a welcome mat for new liquefied natural gas (LNG) import terminals, with two projects taking strides toward construction on top of one being built in New Brunswick.

On the heels of approval by the National Energy Board for the Emera Brunswick Pipeline to connect the Canaport LNG terminal in St. John to northeastern U.S. markets, federal and provincial authorities acted on proposals for additional sites on Quebec’s St. Lawrence River shoreline.

The Quebec government approved construction of the Cacouna Energy Project, an LNG project by Petro-Canada and TransCanada Corp. in Gros Cacouna on the south shore of the St. Lawrence 200 kilometers east of Quebec City (see NGI, July 2).

The C$660 million (US$625 million) plan includes a 500 MMcf/d LNG terminal and a 240-kilometer (150-mile) pipeline connecting to transportation services reaching markets in the northeastern U.S., Quebec and Ontario. The development schedule calls for the new gas import operation to go into service in 2009.

At the same time, the C$840 million (US$795 million) Rabaska project by Montreal distributor Gaz Metro, Enbridge Inc. and Gaz de France received a positive recommendation from a joint review panel of Ottawa’s Canadian Environmental Assessment Agency and Quebec’s Bureau d’audiences publiques sur l’environment.

Rabaska, on a site in the Quebec City industrial satellite town of Levis, includes a 500 MMcf/d LNG terminal and a 42-kilometer (26-mile) pipeline connection to the TransQuebec & Maritimes (TQM) system. Completion is scheduled for 2010.

Rabaska’s target markets are Quebec and Ontario, but additional gas entering the region is also expected to improve the availability of Canadian-produced gas for exports to the northeastern U.S.

The Rabaska group vowed to press ahead into final approval stages with provincial and federal authorities, with consortium president Glenn Kelly describing the environmental assessment report as a complete vindication for the consortium’s portrayal of LNG as an economic plus and safe for nature and communities.

The book-length report of the federal-provincial joint review panel was studded with acknowledgements of potential economic positives offered to the eastern side of North America by LNG.

The panel noted consensus among industry and government authorities that Western Canadian gas supplies have either peaked or soon will, reaching a turning point that will inevitably lead to decline. “Other Canadian reserves,” notably arctic supplies that are prohibitively distant and expensive, “are not accessible to the continental natural gas transport network and their possible development could take several years,” the report added.

The panel recalled that Quebec energy policies since the 1970s repeatedly have expressed strong interest in LNG. The latest provincial policy, promulgated last year, described imports as “of considerable interest,” the assessment report noted.

“The establishment of LNG facilities in Quebec would represent a diversification of its natural gas supply and would have the effect of reinforcing its energy security,” the panel said.

The report noted that Western Canadian gas supplies delivered via the TransCanada system are already tightening up in Quebec, triggering price increases and environmentally undesirable switches to heavy fuel oil by industrial plants.

“The creation of new terminals would help diversify our supplies and would have a very positive impact on regional economies, due to the jobs created at the construction phase and the spill-over on other industrial investments,” the report said.

Spin-offs include improved raw material supplies for Quebec petrochemical plants and, in the Levis area, access to advanced and large-scale refrigeration services for other industrial operations.

“The project provides a major potential for use of LNG cryogenic potential,” the review panel said. The process of converting frigid LNG into warm gas will create “cold units” also known as “frigories” to French engineers for food processing, biotechnology and pharmaceutical plants.

The chilling effect will be especially useful for industrial operations located within 500 meters (0.4 miles) of the terminal. An agreement between the Rabaska group and the Levis city government calls for hookup points enabling transfers of cold units from the terminal to other operations, the review panel noted.

As for intense environmental controversy that the proposal aroused, the panel concluded that an LNG terminal located in an area already noted for industrial activity will have moderate effects that can be successfully mitigated.

The Rabaska group observed that most of the panel’s 34 environmental recommendations have been anticipated by the project design. “No recommendation poses a problem for Rabaska. This report is definitely positive,” Kelly said.

The next steps in the process will be formal acceptance of the joint review panel’s report by the federal and provincial cabinets, then approvals including conditions recommended by the environmental findings. Rabaska awaits coordinated decisions and announcements, confident that the review panel report plus the earlier approval of Cacouna means the LNG terminal project will soon enter the construction phase.

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