Bear Head LNG Corp. — which recently doubled the size of its proposed Nova Scotia liquefaction and export terminal to 8 million tonnes per annum (mtpa) of liquefied natural gas (LNG) — is asking Canada’s National Energy Board (NEB) for a license to export ultimately up to 12 mtpa.
The company, a unit of Australia’s Liquefied Natural Gas Ltd. (LNGL), is seeking licenses to import gas from the United States and export LNG from Nova Scotia over 25 years. Under the NEB filing, exports would be authorized at 8 mtpa beginning in 2019, increasing to 12 mtpa in 2024 depending upon market and supply conditions, Bear Head said. The application seeks a license to import up to 503 Bcf of gas annually from the United States.
Natural gas from producing basins in both Canada and the United States, potentially including the Marcellus Shale, provide options for supply, the company said.
“At this point, all of our major Canadian governmental approvals are in place or applications are before the regulators,” said Bear Head COO John Godbold. The doubling of the project size to 8 mtpa was disclosed in recent filings to the Nova Scotia Utility and Review Board (UARB) and Nova Scotia Environment (NSE) (see Daily GPI, Nov. 3a).
Bear Head initially proposed start-up production of only 4 mtpa, stepping up to 8 mtpa in 2021 and 12 mtpa in 2024. CFO Ian Salmon said the decision to expand initial capacity of the facility was based on market response and gas supply projections. “The market is stronger than we anticipated, and we are well positioned to meet customer needs,” Salmon said.
The company hired former NEB chairman Roland Priddle to assess whether the project’s proposed export volumes would be surplus to Canadian gas requirements. According to Bear Head, Priddle’s report said NEB’s “confidence in Canadian and North American gas resource has been well placed, continental production has expanded dramatically and Canadians have continued to be able to meet their gas requirements in an entirely satisfactory manner at prevailing market prices.”
Priddle also suggested, according to Bear Head, that the Nova Scotia and Maritimes natural gas market could benefit from projects anchoring large-volume incremental supplies of natural gas. “In this connection, the Bear Head LNG project, because of its major gas requirements, could be the catalyst for a more effective Maritimes gas market functioning,” Priddle said.
A separate study conducted by Ziff Energy for Bear Head found that the exports proposed by the company “will not cause Canadians any difficulty in meeting their natural gas requirements at fair market prices during the forecast period. Canada and the U.S. have productive natural gas potential resources in excess of projected demand during the forecast period,” Ziff said.
Bear Head has 12 permits in place to build an LNG import facility, including an approved environmental assessment; permits to construct a gas plant facility from NSE and the UARB; and a Development Permit from the municipal government in Richmond County. Modifications for the conversion from the previously proposed LNG import facility to exports were the subject of regulatory filings presented to the UARB and NSE on Oct. 31.
The previous owners of the project spent more than $100 million to design and complete engineering work for the project. “With the existing permitting and the construction that was already initiated, we have a material head start of six to 12 months against competing LNG projects,” Godbold said.
The Bear Head site is on the Strait of Canso near Point Tupper, Richmond County, Nova Scotia, which is about half the shipping distance to major European markets compared to U.S. Gulf Coast ports. “The location puts Bear Head LNG closer than its North American competitors, including those in British Columbia, to burgeoning natural gas markets in India,” the company said.
LNGL is also developing the 8 mtpa Magnolia LNG project at Lake Charles, LA (see Daily GPI, Nov. 3b).
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