Canada makes LNG debut at Canaport

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Canada has entered the liquefied natural gas age with the Canaport LNG terminal at Saint John, New Brunswick, receiving its first shipment.

The joint venture by privately held Irving Oil and Spain’s Repsol is the first onshore LNG facility to be built in eastern North America in 31 years, beating out several rivals in a contest to supply 1 billion cubic feet per day to the gas-hungry U.S. Northeast market, accounting for one-third of New England’s current consumption.

The Canaport partners have decided their C$800 million investment is for the long-term future of gas, not the current over-supplied, under-priced North American market, where gas in storage is approaching record volumes ahead of the winter heating season.

Global LNG supplies are also threatening to undermine the faint hopes of a price rebound and a prolonged decline in drilling.

Fadel Gheit, an analyst with New York-based Oppenheimer & Co., said a glut of LNG entering North America will not only suppress prices, it could deter those poised to invest in the development of shale gas.

However, Canaport has an edge over some of its competition because Repsol, one of the world’s largest LNG shippers, has its own gas supply in Trinidad and Peru and has secured contracts to sell much of its expected output to New England customers.

A spokeswoman for Repsol said the New England market is “very lucrative because it has a lot of supply constraints,” while gas from Trinidad will allow Canaport to be a relatively low-cost supplier.

—Gary Park