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Pieridae Energy Seeks OK to Liquefy U.S. Gas in Nova Scotia for Global Export

The general partner of Goldboro LNG LP II, which is developing a liquefied natural gas (LNG) export terminal on the Nova Scotia coast near Halifax, is seeking authority to export U.S. gas to feed the project.

Pieridae Energy (USA) Ltd.'s "...request for approval of natural gas exports to Canada is the consequence of the pressing need for natural gas in the form of LNG in international markets, growing demand for natural gas in the Canadian Maritimes and Northeast Canada, and favorable U.S. gas production," the company told the U.S. Department of Energy (DOE) in its filing.

Pieridae US filed to export up to 292 Bcf per year (or about 0.8 Bcf/d) from the United States to Canada under multiple long-term contracts. LNG exports would be to countries that have free trade agreements (FTA) with the United States and to those that do not, Pieridae said. Some of the U.S. gas could be used to fuel the liquefaction facility or for other energy purposes, the company told DOE.

The company "...also seeks authorization for the export of natural gas from the U.S. that is converted to LNG to be exported from Canada initially to [an] FTA country where the natural gas is ultimately consumed in a non-FTA country, and...a non-FTA country where the natural gas is ultimately consumed in [an] FTA country," Pieridae said.

"For example, Pieridae US envisions that, as the market matures, LNG may be unloaded from a carrier in an FTA country, then reloaded and exported to a non-FTA country where the LNG is regasified and ultimately consumed. Similarly, LNG could be exported to a non-FTA country, gasified, and then shipped by pipeline for consumption in an FTA country."

Gas would be sourced at or near Baileyville, ME, on the Maritimes & Northeast U.S. (M&N US) Pipeline. No pipeline facilities are planned to be constructed in the United States in support of the project, Pieridae said.

"There are a large number of the new natural gas pipeline projects in the northeast United States...Pieridae may take capacity on existing pipeline systems, and planned new pipelines or planned pipeline expansions," it said. "...[I]t is anticipated that transportation services in Maine, Massachusetts and New Hampshire will be provided to Pieridae US primarily by the operators of the M&N US Pipeline, which system includes pipeline facilities on the U.S. side of the proposed export point. Additional transportation services in the U.S. will be provided to Pieridae US by the operators of certain other pipelines, depending on where in the U.S. the natural gas is sourced."

The company said gas transportation on the Canadian side of the border would be provided by M&N Canada. Pieridae has yet to make long-term gas supply, pipeline capacity or export contracts, it told DOE. Transaction-specific information would be filed when contracts are executed, it said.

The proposal is a bit of an anomaly in a regulatory sense because the project contemplates liquefying and exporting U.S. gas without the aid of a U.S.-based liquefaction/export terminal. "Physical facilities required to export natural gas from the U.S. at the proposed point of export already exist, and any environmental review by the Federal Energy Regulatory Commission (FERC) or another other U.S. federal, state or local agency, as appropriate, of changes that may be proposed for such facilities would occur independently of Pieridae US's proposed exports."

Therefore, Pieridae told DOE, the agency should be able to proceed with evaluation of its application without awaiting facilities review by FERC.

Pieridae asked DOE for expedited review and approval by March 15. "Pieridae US's proposed exports of natural gas from the U.S. to Canada differ from exports to be made from a LNG facility in the Lower 48 states and such differences justify the application of a separate processing track and different procedures than exports from U.S. LNG export facilities."

In March the plans for the terminal at Goldboro, NS, received provincial environmental approval (see Daily GPI, March 21).

Separately in July, Australia-based Liquefied Natural Gas Ltd. agreed to buy a mothballed, partially built Canadian import terminal site on Cape Breton Island in Nova Scotia for US$11 million from Anadarko Petroleum Corp. The company plans to build an export facility at the site (seeDaily GPI, July 28; Feb. 13, 2007).

Reversal of the M&N Pipeline, which currently carries Canadian gas into the United States, to put Marcellus Shale output onto the global LNG market, has also been raised as a possibility by Spanish energy conglomerate Repsol for conversion of its Canaport import terminal next to Irving Oil's New Brunswick refinery at St. John (see Daily GPI, Jan. 2, 2014; Nov. 8, 2013).

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