Green light close for Nova Scotia LNG project

$10B Goldboro plan is in the final stages

CALGARY While much of the Canadian oilpatch is waiting for a decision on an LNG project on the West Coast, Pieridae Energy Ltd. is on track to green light its $10-billion Goldboro LNG project in Nova Scotia as soon as next month.

“The next couple of weeks will be critical for the project,” Pieridae chief executive Alfred Sorensen said, adding that he’s expecting a construction permit from Nova Scotia’s government and finalized agreements with contractors by the end of August.

In addition, Sorensen said Pieridae is close to signing a deal to merge with an Alberta-based natural gas producer, which would give Pieridae a natural gas supply for its Goldboro LNG export facility.

Once the construction permit, contractor agreements and merger is announced, the company is planning to begin construction by the end of the year on the $10-billion terminal 150 kilometres northeast of Halifax, where natural gas from southern Alberta would be chilled until it reaches its liquid state before shipping the product to a utility company in Germany.

The construction start date could make Goldboro LNG the first project of its kind in Canada to reach the milestone after a series of delays and project cancellations at LNG projects planned for British Columbia’s coast.

Combined with the potential Royal Dutch Shell Plc-led $40-billion LNG Canada project on the West Coast, the Goldboro LNG project would boost natural gas prices in Canada and lift the gas sector, which has been hampered by years of persistently low commodity prices, National Bank Financial analysts Greg Colman, Patrick Kenny and Dan Payne said in a research note this week titled The Little LNG Project that Could.

“While perhaps lacking in notoriety relative to its West Coast counterparts, Pieridae’s proposed Goldboro LNG project is well positioned with most of the supporting pipeline and significant funding already in place,” they wrote, adding that a final investment decision is expected by the end of the year.

Even though Pieridae doesn’t have the resources of global super-major Shell, Sorensen said the company still believes it can secure funding for its project and that it can transform into an integrated energy company.

Earlier this year, Pieridae announced it had hired Morgan Stanley & Co and SG Americas Securities as advisers on the project to assist in securing financing. The company also has loan guarantees from Germany and Italy and may also secure loan guarantees from other European countries.

Calgary-based Pieridae has been attempting to integrate with upstream producers through other mergers. It purchased a publicly traded natural gas company last year, buying tiny Quebec Citybased Petrolia Inc., in a reversetakeover to go public and raise its investor profile.

At the time, Petrolia’s market capitalization was $17 million. After the deal closed, the combined entity ’s market cap rose more than tenfold and is now $197 million.

Sorensen said Pieridae is now looking to purchase or merge with a larger natural gas producer in Southern Alberta, which would supply the first phase of the Goldboro LNG project.

In total, the project would export 1.3 billion cubic feet of natural gas per day from the East Coast to European countries keen to diversify their gas supply away from Russia. About half of the project’s gas supply would come from Alberta and the other half might be sourced from plays in Pennsylvania.

“There’s a lot of tug of war between the European Union and Russia and America right now and it’s giving us the ability to market easier in Europe just because we’re not either of those two,” Sorensen said.