Up to 99% of tanker deliveries to Canada's first liquefied natural gas (LNG) import terminal on the Atlantic Coast will be re-exported to the United States, sending up to a Bcf/d into New England, New York and New Jersey, possibly by late this year, according to new filings with Canada's National Energy Board (NEB).
Applications for 25-year import and export permits by Repsol Energy Canada Ltd. seek traffic of up to 370 Bcf in annual tanker landings, about the same as the 1 Bcf in daily pipeline exports.
The dealership, a subsidiary of Spain's Repsol YPF SA, will take delivery of the LNG at its parent company's part-owned Canaport. The terminal is currently under construction for about $750 million near Irving Oil's Saint John refinery on the New Brunswick coast. Completion is scheduled for late this year.
The trading permit applications show Repsol intends to re-export almost all the LNG in regasified form via the 60-mile Brunswick Pipeline nearing construction by Emera Brunswick Pipeline Co. The route connects with Maritimes & Northeast Pipeline (M&NP), and in turn provides access to a wide range of northeastern U.S. markets through M&NP connections with the Tennessee and Algonquin systems, the applications say.
Repsol Energy North America (RENA) will market the gas. "The U.S. Northeast provides the anchor market for the Canaport LNG terminal as the domestic Canadian market is not of sufficient size to support such an undertaking," the NEB applications say.
The prime targets of the sales drive will be local distribution companies (LDC), gas-fired power plants and large industrial and commercial customers. "RENA has commenced discussions with a number of LDCs and power generators exploring the opportunity for long-term arrangements," the documents report. Seasonal and spot sales will also be available at a variety of pricing options. RENA maintains that "significant market opportunities exist for the regasified natural gas that will be available from the Canaport facility."
A market study filed to support the applications predicts total gas demand in Canada's maritime provinces, New York, New Jersey and New England will increase by 1.3 Bcf/d as of 2010. The new LNG importers hope to satisfy 730 MMcf/d of the increase. The growth projections foresee steady additional demand growth in the region reaching an incremental 2.8 Bcf/d by 2015, 4.3 Bcf/d by 2020, 5.9 Bcf/d by 2025 and 7.6 Bcf/d by 2030.
About half the projected demand increases are attributed to gas-fired power stations, and local distribution companies are expected to account for most of the rest of the growth. Over the next three years the LNG importers expect Canada's Maritimes to account for only 4% of the projected total demand growth, while New York takes 53%, New England 28% and New Jersey 15%.
The message to Canadians, who are expected to raise questions at hearings the NEB intends to call on the trade permit applications, is that they need to let a new supply source encourage development of gas-consuming industry and especially power plants if they want to use the LNG.
A second message is that the tanker imports will leave plenty of room on the Atlantic seaboard market for EnCana Corp.'s proposed Deep Panuke production development offshore of Nova Scotia near Sable Island. The project remains in planning stages with no immediate decision to start on construction on the horizon yet. The RENA projections suggest additional demand for gas, over and above the total that Canaport can satisfy, will be 580 MMcf/d in 2010 and more than 2 Bcf/d by 2015.
Although the Caribbean has been identified as the most likely origin for the new LNG cargoes, RENA is not committed to a single source, and the NEB has been told Repsol intends to tap potentially all of its international production network for the new deliveries to the Canadian coast.
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