The Western European gas market would receive liquefied natural gas (LNG) from the Goldboro LNG project in Guysborough, Nova Scotia (NS) under a long-term sales agreement struck by terminal developer Pieridae Energy (Canada) Ltd. and E.ON Global Commodities SE (EGC), a unit of E.ON SE, one of the world’s largest investor-owned power and gas companies.
Pieridae is to deliver about 5 million tons per annum (mtpa) of LNG to E.ON for 20 years into a number of locations in Western Europe. Contract pricing is based upon market prices of natural gas in Western Europe. As of April, the European Union gas price was US$12.88/MMBtu, nearly triple the going rate in the U.S. and Canada. The E.ON deal enables Pieridae to stride ahead on an ambitious schedule calling for terminal construction to start in 2015 and deliveries to begin in 2018.
The deal “will provide the European gas market, and Germany particularly, with a new secure source of natural gas supply,” said Pieridae CEO Alfred Sorensen, who added that the agreement represents a major milestone for Goldboro LNG. “Our agreement with E.ON provides the economic security needed to complete the development of the first process train of the Goldboro LNG terminal.”
Pieridae, in collaboration with Contact Exploration Inc., said it is having “advanced discussions” with North American natural gas suppliers and pipelines, which are expected to be concluded within the terms of the sales and purchase agreement. Earlier this year, Contact and Pieridae created Pieridae Production LP to focus on gas exploration and production in support of the LNG project (see Daily GPI, March 6). Calgary-based Contact has operations in northern Alberta and in British Columbia and an array of oil and gas assets in New Brunswick, next door to Nova Scotia and within short potential connection distances to MNP.
The Goldboro location is a gas-transportation junction near the Nova Scotia capital of Halifax, where Maritimes & Northeast Pipeline (MNP) obtains supplies delivered from the Sable Offshore Energy Project and the nearby Panuke production platform currently nearing completion.
Pieridae has kept open all options for acquiring gas supplies, ranging from Canadian offshore development to U.S. shale production that could flow on a potential reversal of MNP, which has been a Canadian export route to the northeastern United States for about 14 years.
The Goldboro terminal, announced last fall (see Daily GPI, Oct. 25, 2012), is to have capacity to export up to 10 mtpa year round, with on-site storage capacity of 690,000 cubic meters of LNG. The export capacity is to be built in stages, with each phase sending out tanker cargoes at an annual rate of five million tons, or about seven ships per month. Upon start of commercial operations, expected by the first quarter of 2020, natural gas would be transported to Goldboro using existing pipeline systems.
Pieridae is conducting the environmental assessment for the project and plans to submit the assessment report to Nova Scotia regulators this year. “An approved environmental assessment would be the next major milestone towards a final investment decision expected in 2015. If the decision is made to proceed with developing Goldboro LNG, construction could begin in late 2015,” said Sorensen.
E.ON launched EGC last month by merging its two units for energy trading and its global gas business into the new business unit, which is based in Dusseldorf, Germany. EGC combines the main activities of predecessor companies E.ON Energy Trading SE (already EGC since March 1) and E.ON Ruhrgas AG.
“E.ON Global Commodities controls the market risks for E.ON and is thus of key importance to our risk management,” E.ON board member Jorgen Kildahl said at the time. “This repositioning enables us to be much more effective on global markets. EGC will play a major part in implementing our international strategy outside Europe.”
EGC CEO Klaus Schafer said the name of the unit reflects the company’s ambitions. “We are already operating on global energy markets to optimize E.ON’s portfolio. Looking ahead, we are planning stronger trading activities in the U.S. and in Asia. The new company allows us to pool our expertise and makes us more efficient.”
E.ON is one of the world’s largest investor-owned power and gas companies with facilities across Europe, Russia and North America supplying energy to about 26 million customers.
Last month Golden Pass Products LLC and its backers said they had struck a framework agreement to potentially sell the full 15.6 mtpa output of the proposed Golden Pass LNG project in Sabine Pass, TX, including sending LNG to the United Kingdom’s South Hook facility (see Daily GPI, May 10).
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