Nova Scotia forges ahead on liquid gas
B.C. project hit by environment assessment protecting porpoises
The first liquefied natural gas project in Canada may be built on the East Coast, not the West Coast.
The companies backing two LNG projects in Nova Scotia say they are still on pace to sanction their multi-billion-dollar facilities this year, while a key British Columbia project was dealt a potential setback Wednesday when the Canadian Environmental Assessment Agency said it would hurt porpoise habitat.
The CEAA released a draft of its Environmental Assessment Report on Wednesday, which concluded the $36-billion Pacific Northwest LNG project would “cause significant adverse cumulative environmental effects to harbour porpoise.”
The agency did note the final decision on whether the negative environmental effects are justifiable remains with the federal environment minister and that the project would not cause significant environmental damage to “all other valued components,” like air quality.
Malaysian national oil company Petronas announced in June it had reached a positive final investment decision on the project — but that was conditional on the project receiving a positive environmental assessment from the CEAA.
The company, long considered a front-runner to build an LNG export project in Canada, did not immediately respond to a request for comment.
By contrast, two LNG export companies confirmed they hope to sanction projects in Nova Scotia this year — and possibly begin construction within the year.
“We are still targeting a final investment decision at the end of the third quarter 2016,” said Mark Brown, director of project development for Halifax-based Pieridae Energy Ltd., which plans to build the $5- to $10-billion Goldboro LNG plant on the east coast of province at Goldboro.
The company announced this week it had received regulatory approval to chill U.S.-sourced natural gas to its liquid state for export to countries that have not signed free trade agreements with the U.S.
Brown said that permit was the last major regulatory approval the project needed from national governments, and the company was applying for a construction permit from the Nova Scotia government before it sanctions the project.
“We are the only ones with a customer. You need customers and we have one for half of the permitted output, which is sufficient to let us get to FID (final investment decision) on one train,” Brown said.
While other companies have signed memorandums of understanding with potential customers, Brown said his project is best positioned to be the “first mover” because Pieridae has a signed contract with Dusseldorf, Germany-based Uniper Global Commodities S.E. to buy the LNG once it is processed.
Like Goldboro, LNG Ltd.’s Bear Head LNG project — located further up the coast at Point Tupper in Cape Breton — announced last week it had also received permits to export U.S.-sourced gas to non-freetrade agreement countries.
“We are really working towards trying to achieve (a final investment decision) this year for Bear Head, as we have stated that the industry has cut against us,” LNG Ltd. chief financial officer Michael Mott said, referring to the continued fall in oil prices, to which LNG prices are linked in overseas markets.
Mott said his Perth, Australiabased company is currently negotiating with a pipeline operator in the U.S. for capacity to import that natural gas into Nova Scotia and for subsequent export to markets around the world. The company is also trying to lock-up contracts with utility companies overseas to buy the LNG after it is processed.
The progress on Canada’s East Coast is a sharp contrast to the numerous project delays in B.C.
This month, Shell Canada Ltd. announced it would not reach a final investment decision on its LNG Canada project this year, which carries an estimated price tag of $25 billion to $40 billion.
The last company considered a front-runner to build an LNG project in B.C. is Calgary-based AltaGas Ltd., which is in a tax dispute with the Canadian government over its floating Douglas Channel LNG project, which would be built overseas and tugged across the ocean.
The company has said it won’t sanction that project — as it was expected to do in 2015 — until the tax dispute with Ottawa is resolved. A company spokesperson said Wednesday there was no update on that dispute.
Mott said LNG Ltd. believes there are “always advantages to being the first mover” and, assuming it signs the offtake agreements in short order, said he wants Bear Head to be the first project built in Canada.
“We fully believe fundamentally in the gas business and in the global need for gas. We are working on finding those customers and sign them up,” Mott said.