Canada’s eastern LNG export project on track for 2015 FID

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Like the US, Canada is experiencing an LNG export stampede. The National Energy Board has already given export approvals to eight projects, and applications from another five are “under review”. Most of these proposed projects will be located on the west coast, putting them in a prime position to export LNG to markets in Asia Pacific. Goldboro LNG is an exception. Located in Nova Scotia on the east coast, it has already committed 5 mtpa to Europe. What are its chances of reaching final investment decision (FID)in 2015, as planned?

by Alex Forbes

The recent announcement that the Nova Scotia Environment Review Panel has issued its recommendation report on the proposed Goldboro LNG plant to Canada’s environment minister, Randy Delorey, is good news for a project that has been making impressive progress towards FID.

The panel recommended that the project should be approved, subject to a number of terms and conditions. The report will now be reviewed by Delorey, whose final decision is expected by the end of March. There is little reason to suppose that he will object to the project going ahead. Over the past year, Pieridae, the project’s sponsor, has implemented a comprehensive consultation and engagement program for Goldboro LNG, and says it is “thankful for the support received”.

The environmental assessment report, says Pieridae, includes “a thorough assessment and analysis of the potential effects on the environment”. It concludes that with the proposed environmental management, mitigation, and compensation measures implemented, “adverse effects will be largely localised, short-term and reversible, and that none of the directly affected areas are considered critical habitat for species at risk”.

Progress on all fronts: With the project now second in line for an export approval from the National Energy Board (NEB), and a sales and purchase agreement for 5 mtpa already in place, there is little reason to suppose that it will fail to reach FID in 2015, as planned.

Export approval from the NEB is still awaited, but that is hardly surprising given that Pieridae did not submit its application until November last year. It has applied for “long-term, multi-contract authorisation to import up to 1 Bcf/d of natural gas through the existing pipelines between Canada and the US and export up to 1.4 Bcf/d as LNG from a point near Goldboro, Guysborough County, Nova Scotia”.

Status of export licence applications to Canada's NEB (March 2014)

LNG exports from Canada have aroused much less opposition than in the US and the NEB has so far approved all the applications it has considered.

Moreover, in June last year, Pieridae signed a long term sales agreement with the German energy company E.ON for 5 mtpa of LNG to be delivered to locations in western Europe over a period of 20 years. Interestingly, “LNG pricing in the agreement is based on market prices of natural gas in the western European market”.

“Secure source of supply” At the time of the deal with E.ON, Alfred Sorensen, the company’s president and CEO, said: “We are pleased to have reached a long-term agreement with E.ON, which will provide the European gas market and Germany particularly with a new secure source of natural gas supply." That looks more relevant than ever in the light of gas supply worries aroused by the ongoing crisis between Russia and western powers over Ukraine – especially given Germany’s heavy dependence on Russian gas.

According to Sorenson: “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."

Pieridae – an energy infrastructure company founded in 2011 – is planning an export facility with a liquefaction capacity of 10 mtpa, so half of the plant’s capacity is already committed. The plant will have on-site storage capacity of 690,000 cubic metres of LNG. If FID is reached next year as planned, the plant is due to start up in the first quarter of 2020. So far, so good.