Maritimes & Northeast Pipeline announced Friday that it signed precedent agreements for about 1.5 Bcf/d of firm transportation capacity with the developers of two liquefied natural gas (LNG) import terminals in Atlantic Canada.

Anadarko Petroleum, which is building the Bear Head terminal in Point Tupper, NS, signed up for 813,000 MMBtu/d of firm transportation, and Repsol YPF signed an agreement to transport 750,000 MMBtu/day from the proposed Canaport LNG terminal it is building with partner Irving Oil near Saint John, NB.

The agreements are for transportation service along the 850-mile pipeline system to markets in Atlantic Canada and in the northeastern United States. Pipeline transportation service from both the Bear Head site and the Canaport site is planned to begin in 2008. A third 1 Bcf/d LNG import terminal that is being built in Goldboro, NS, by Keltic Petrochemicals fell outside the expansion timeline, a Maritimes spokesman said. Bear Head and Canaport already have received final authorizations from Canadian authorities. The Keltic terminal is still making its way through the regulatory process.

“LNG development is a major step forward for the energy sector in Atlantic Canada and the northeastern United States,” said Doug Bloom, president of Maritimes. “Adding another source of natural gas supply will provide increased energy reliability, security and choice to consumers in both regions.”

Maritimes held an open season earlier this year to gauge market interest in transportation capacity for natural gas from LNG and other supply projects in the region (see Daily GPI, April 27). The Sable Island Offshore Energy project has been utilizing less of the pipeline system in recent years from a peak of about 555 MMcf/d when gas flows began in January 2000. They were producing about 415 MMcf/d this spring. Shell cut its Sable reserves by about 670 Bcf last year.

Meanwhile, demand is growing rapidly in the northeastern U.S. The pipeline currently has long-term contracts for 555 MMcf/d of firm capacity in Canada and 360 MMcf/d in the United States. Another 40 MMcf/d is under short-term contract in the U.S. The Canadian part of the pipeline currently can transport about 600 MMcf/d, while the U.S. portion can carry about 450 MMcf/d.

The proposed expansion project is expected to include both compression and some additional pipeline looping. It undoubtedly also will require entirely new and much larger pipeline laterals to Point Tupper (37 miles from the mainline) and St. John (60 miles from the mainline). Tolls are expected to decrease for existing shippers.

Company officials previously said that the pipeline could add 600-700 MMcf/d of capacity through compression alone. There currently is no compression on the Canadian portion of the system although several sites have been approved for compressor stations.

Thanks to a Phase III expansion of Maritimes in 2003, the Boston area is now a major direct destination. Phase III went into service in December 2003, extending Maritimes about 25 miles to Algonquin’s HubLine system in Beverly, MA. The extension provided about 230 MMcf/d of capacity, but Maritimes’ U.S. mainline remained at 400 MMcf/d.

Meanwhile, construction of the two LNG terminals is expected to be completed in late 2007 or early 2008. Construction of the C$600 million Bear Head terminal on Cape Breton Island, along the Strait of Canso in Nova Scotia, started this summer after Nova Scotia Business Inc. sold an industrial site to Bear Head LNG Corp., an Anadarko subsidiary, earlier this year. The 1 Bcf/d terminal received final approvals last year and is expected to be in service in 2008. The LNG site includes 179 acres of land and a 67-acre water lot.

Spain’s Repsol, a major player in the global liquefied natural gas (LNG) business, signed a definitive partnership agreement just last month with Irving Oil on development of the 1 Bcf/d Canaport terminal in St. John, which would be connected to Irving Oil’s refinery as well as Maritimes. Repsol will be responsible for providing all of the LNG and will hold the capacity of the terminal. Irving Oil will market the regasified LNG in Atlantic Canada, and Repsol will market the regasified LNG elsewhere in Canada and in the United States.

Front-end engineering design for the terminal is nearly complete and a request proposals for engineering, procurement and construction (EPC) contracts is expected to be released this month.

Maritimes is just beginning work on a detailed engineering design and stakeholder consultation for the system expansion. Regulatory applications are expected to be filed in late 2005 or early 2006 to the National Energy Board and the Federal Energy Regulatory Commission.

Maritimes is owned by affiliates of Duke Energy (77.53%), Emera Inc. (12.92%) and ExxonMobil (9.55%).

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