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Canaport Conversion to LNG Exports Scuttled by Market

Deterioration of hopes for liquefied natural gas (LNG) exports from Canada on a large scale has spread from the Pacific to the Atlantic coast.

Repsol Energy Canada and Irving Oil have put on hold their plan -- called Saint John LNG -- to convert their Canaport import site in New Brunswick into an export terminal.

Saint John LNG is the third Canadian casualty of global gas price deterioration this year. The first two were export projects on the Pacific Coast.

In British Columbia, an international consortium led by AltaGas Ltd. halted work on DC LNG (see Daily GPI, Feb. 26). TransCanada Corp. suspended a C$1.9 billion (US$1.4 billion) export addition to its Nova Gas Transmission Ltd. western supply network due to a review of plans by its customer, the KM LNG terminal proposed by Chevron and Woodside Energy (see Daily GPI, Feb. 5).

The New Brunswick withdrawal followed a lengthy, unsuccessful search for additional investors to support the proposal’s forecast cost of up to C$4 billion (US$3 billion). Repsol has a 75% share in Canaport. Irving owns 25%.

The investment failure was blamed on a global decline in LNG prices due to growing supplies and escalating sales competition, with long lineups of export schemes in Canada and the United States contributing to the overseas market change.

The six-year-old Canaport, next door to Irving’s Saint John oil refinery, has capacity to import 1.2 Bcf/d.

Most Canaport imports were intended for re-export to the northeastern United States via Maritimes and Northeast Pipeline (MNP). The companies and New Brunswick Energy Minister Dan Arsenault described continuing the original strategy as an option that shows signs of improving because New England has developed a shortage of pipeline capacity during seasonal demand peaks.

The suspended Saint John LNG scheme had 25-year licenses from the National Energy Board (NEB) to import and export a mixed stream of U.S.- and Canadian-produced gas at a rate of up to about 750 MMcf/d. The scheme relied on reversing flows on MNP, especially for U.S. shale gas.

The Canadian LNG project lineup on the Atlantic Coast still has four entries: two in Nova Scotia and two with Quebec locations (see Daily GPI, June 5, 2015). The Nova Scotia proposals, like Saint John, include eventually reversing MNP because domestic production from the Sable Offshore Energy Project and the Panuke platform is depleting, creating Canadian needs as well as encouraging exporter plans for imports from the United States (see Daily GPI, March 9).

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