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Breakthrough for Atlantic Canada LNG
Gary Park For Petroleum News
A plan unveiled only seven months ago to export LNG from Canada’s Atlantic Coast is making headway where it counts most.
The Goldboro project proposed by Pieridae Energy (Canada) and small E&P company Contact Exploration announced June 3 it had secured a 20-year sales agreement to start delivering 5 million metric tons a year to German utility firm E.ONSE, starting in the first quarter of 2020.
Pieridae Chief Executive Officer Alfred Sorenson said the contract will provide the “European market and Germany particularly with a new secure source of natural gas supply.”
The company said the LNG pricing is “based on market prices of natural gas in the Western European market.”
Sean Lewis, a Pieridae spokesman, said the agreement is “binding ... subject to conditions in Pieridae’s control.”
He said the preliminary final engineering and design work is complete and the estimated project cost stands at US$5 billion.
Pieridae said it and Contact are engaged in “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.”
The Goldboro terminal is being designed to export up to 10 million metric tons a year, with on-site storage capacity of 690,000 cubic meters of LNG, Pieridae said.
Environmental approval needed The company said approval of an environmental assessment application by the Nova Scotia government would set the stage for a final investment decision in 2015 and the start of construction with a workforce of 3,500 late that year.
Sorenson, formerly president of Duke Energy’s European business unit and the founder of Galveston LNG in spearheading the Chevron-operated Kitimat LNG project, said when the proposal was unveiled that prospective European customers told him they were eager to diversify their supply sources to Atlantic Canada and Quebec.
He said at the time that Goldboro would give priority to a “Canadian supply solution, both onshore and offshore,” while Contact CEO Steve Harding said Goldboro would advance gas development in the provinces of Nova Scotia and New Brunswick.
Marcellus may be source However, sources in the Nova Scotia government said they understood Pieridae hoped to access Marcellus production in New York and Pennsylvania.
Goldboro is the landfall for Sable production that has fallen to 440 million cubic feet per day from a peak of 500,000 million cubic feet. Encana’s Deep Panuke field close to Sable is due on stream this year, targeting 300 million cubic feet.
Ed Kallio, Ziff Energy Group’s director of gas consulting, said the Pieridae-E.ON deal is a “serious development with a big player in Western Europe.”
But he cautioned that gas supplies will be a challenge, given the steep decline of volumes from Sable, which Deep Panuke will not be able to replace.
He said the best supply options are either the delivery of gas from the U.S. Marcellus play, or opening up new plays in Atlantic Canada.
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