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Pieridae Energy Ltd.
Calgary-based Pieridae’s decision marks the latest setback to the company’s ambition of exporting liquefied natural gas from the East Coast.
Multibillion-dollar pipeline upgrades by TC Energy Corp.
in Ontario and Quebec would have been required to transport Western natural gas to Pieridae’s Goldboro LNG site. Without pipeline access to supplies of natural gas in the West, Pieridae has shelved its proposal to export 10 million tonnes a year of LNG from Goldboro.
Pieridae chief executive officer Alfred Sorensen said he is keeping hopes alive for a scaled-down version of the project that would export three million tonnes a year of LNG from a proposed land-based terminal in Nova Scotia. “We have no interest in taking Western Canadian gas any longer, and that is why the project has shrunk in size,” Mr. Sorensen said in an interview.
The revised proposal hinges on whether the New Brunswick government would be willing to eventually lift a moratorium on multistage hydraulic fracturing, or fracking, of natural gas in that province next door to Nova Scotia.
“We have been spending some time to try and figure out whether there’s an option to go back to Atlantic Canada as the source of natural gas. It’s not quite dead yet,” Mr. Sorensen said. “So it’s a bit of a long shot, but it’s the only shot.”
He acknowledges opposition from climate activists in New Brunswick, where then-premier Brian Gallant introduced a fracking ban in 2014. Except for a small exemption, the moratorium has stayed in place under Premier Blaine Higgs, who took office in 2018.
With Europe experiencing an energy crunch after Russia invaded Ukraine in February, 2022, Mr. Higgs has reiterated his position that the fracking ban in New Brunswick should be re-examined.
In any case, Pieridae’s Goldboro and Repsol SA’s Saint John LNG had placed their bets on obtaining natural gas from Western Canada.
Earlier this month, Madrid-based Repsol scrapped the idea of LNG exports under a potentially reconfigured Saint John terminal, which currently operates as an import facility in New Brunswick.
The pipeline tolls that would have been charged to producers for transporting natural gas from west to east proved to be too expensive. “Following a study carried out by the company, it was determined to not continue with the Saint John liquefaction project as the tolls associated to it made it uneconomical,” Repsol spokesman Michael Blackier said in a recent statement.
The Conservation Council of New Brunswick and the New Brunswick Anti-Shale Gas Alliance issued a joint statement earlier this month to emphasize their opposition to fracking. Their statement criticized “the unrealistic idea from Premier Higgs that the province would lift the shale gas moratorium.”
Mr. Sorensen said the main obstacles facing Saint John LNG and Goldboro turned out to be TC Energy and the Canadian government not being willing to step up with pipeline improvements in Ontario and Quebec.
“The issue is pipelines have been a bit of a problem in this country, with that potential for cost overrun risk,” he said. “The problem is one of risk-taking and TC Energy wasn’t willing to take any, and the government wasn’t willing to do anything to cover that risk. So there is no way for the Western Canadian gas to play a major role in an East Coast LNG project.”
Keean Nembhard, press secretary for Natural Resources Minister Jonathan Wilkinson, said it’s up to LNG proponents to ensure the economic viability of their proposals. “In consultations with industry, the government of Canada has heard that the cost of transporting gas from Western Canada to Atlantic Canada is too high to make projects of this scale economical,” Mr. Nembhard said in an e-mail on Monday.
Pieridae previously considered operating a floating LNG facility for exporting 2.5 million tonnes a year, but now believes the best way forward would be to order large modules from overseas for assembly onshore at the Goldboro site.
Mr. Sorensen said it would be realistic for a small-scale terminal to be built in Nova Scotia, given that Venture Global LNG Inc. opened its much-larger Calcasieu Pass LNG project in Louisiana in early 2022, after three years of modular construction. But he emphasized that there won’t be any shipments within three years to Goldboro’s target market in Germany. “It’s not anywhere close to a final investment decision,” he said.
TC Energy has an extensive pipeline network for natural gas that includes serving LNG export terminals on the U.S. Gulf Coast. “We are continually looking to support our customers as they explore options to serve growing and new market demand, including LNG,” TC Energy said in a statement on Monday.
TC Energy’s pipeline system in Ontario would have required significant upgrades, as would the Trans Qubec & Maritimes Pipeline (TQM) system in Quebec. Calgary-based TC Energy and Montreal-based nergir each own a 50-per-cent stake in TQM.
There is also a circuitous pipeline route through the U.S. Northeast before arriving on Canada’s East Coast.
TQM connects with Portland Natural Gas Transmission System (PNGTS), a pipeline route in New England that is majority owned by TC Energy. PNGTS in turn connects with Maritimes & Northeast Pipeline, which runs from New England to New Brunswick and Nova Scotia. Calgary-based Enbridge Inc. is the majority owner of Maritimes & Northeast.