The Canadian contender to start liquefied natural gas (LNG) exports from the Atlantic Coast has scooped up a western producer capable of supplying 16% of the first half of the proposed Nova Scotia terminal’s planned capacity.

In a friendly takeover Goldboro LNG sponsor Pieridae Energy Ltd. is paying with shares to acquire Ikkuma Resources Corp., which posted production of 113 MMcf/d in its latest available results statement for first-quarter 2018.

The export plan calls for a C$10.6 billion (US$8.6 billion) terminal with twin LNG "trains" for 700 MMcf/d each. Hydraulic fracturing (fracking) bans enacted by Nova Scotia, New Brunswick and Quebec led Pieridae to seek natural gas in Alberta, British Columbia and the United States.

Ikkuma has been running in the red due to depressed prices on western Canadian markets plagued by a supply glut and limited pipeline capacity. The producer posted a first-quarter 2018 loss of C$5 million (US$4 million), which followed a full-year 2017 loss of C$39.5 million (US$31.6 million).

In July the Calgary-based producer sold midstream production handling assets for C$23 million (US$18.4 million) and described the transaction as “the initial stage of the corporation's plan to divest of noncore natural gas assets.”

The Pieridae takeover transaction includes an agreement to spin off a separate firm for oil drilling targets that Ikkuma has declared intentions to develop as a way out of the lean times in western Canadian gas production.

The announcement of the combination said, “Ikkuma is expected to provide a basis for further consolidation of long-life natural gas assets in Alberta and British Columbia that are complementary to the feedstock needs of Pieridae.”

Goldboro LNG has European marketing agreements with German and Swiss energy merchants, holds Canadian and U.S. cross-border gas trade permits, and has Nova Scotia environmental approval for the proposed terminal.

Although no pipeline capacity has been booked and no move has been made yet to start construction, the project ran into environmental resistance at the same time as Pieridae made its start on acquiring gas supplies.

More than 30 Canadian and European green groups fired off a protest letter to Germany’s environment and economy ministers, calling for rejection of a Goldboro LNG request for a German government construction loan guarantee in exchange for a supply commitment.

The protesters predicted the proposed terminal would both increase Nova Scotia carbon emissions and accelerate fracking in Canada and the U.S. Pieridae and Ikkuma, said their operation would tap conventional, naturally-flowing gas pools.

“The purchase of Ikkuma begins the final steps to reaching the final investment decision,” said a statement by Pieridae chief executive Alfred Sorenson.

Pieridae has signed on Morgan Stanley & Co. and SG Americas Securities LLC as financial advisers. The project risks losing its Nova Scotia environmental approval and site near the provincial capital in Halifax unless it has a final investment decision by the end of the year and construction starts by March 19.