A scaled-down version of the Goldboro LNG export project on Canada’s east coast is moving forward again. And this time it can apparently boast the support of the federal government, which aims to ship gas to the country’s democratic allies in Europe as quickly as possible.

Goldboro LNG’s feedgas is to come from the gas-producing assets of its developer, Calgary-based Pieridae Energy, in the foothills of Alberta’s Rocky Mountains in the west of Canada. But last summer a large land-based version of the Nova Scotia project was put on hold, with Pieridae citing cost pressures and an inability to secure financing. Petroleum Economist spoke to Alfred Sorensen, the firm’s CEO, on what has changed both in terms of the project and the wider operating environment.

Since Russia’s invasion of Ukraine, the Canadian government has been encouraging the development of eastern Canadian LNG export projects to help Europe secure non-Russian gas to improve its energy security. What are the feds doing to help revive your Goldboro LNG project?

Sorensen: It is still early days, so it is tough to say exactly what the federal government will do to help move our project forward. Not long ago, before the invasion, they had little interest in our project. They were focused on decarbonisation, and our project simply was not in their wheelhouse.

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Even now the Trudeau cabinet appears split, with about half—led by Deputy Prime Minister Chrystia Freeland—wanting Canada to produce and export more oil and gas to support our democratic allies in Europe and elsewhere, and the other half still stuck on the climate change doctrine.

The Pieridae management team has said that federal government must make your project a ‘national priority’ for you to continue with its development. What exactly does that mean?

Sorensen: The opposite of what they have done in the past—combating climate change no matter the cost [laughing]. For us to ship western Canadian gas to Nova Scotia to liquefy it for export to Europe requires agreement by multiple jurisdictions in Canada, from west to east.

And, as I tell my European counterparties, our country is much like the Holy Roman Empire, with a weak centre and strong provinces. As a result, what we need is for the feds to minimise the regulatory burden to build new pipeline capacity and to step up to arbitrate between the provinces to push through these projects in a timely and cost-effective manner.

You have said the first step in reviving your LNG project is to secure an investment partner. How is that coming along?

Sorensen: It is coming on well. We are about to launch the feasibility study for the scaled-down version of our Goldboro LNG project, including updated numbers for the smaller modular liquefaction facility and a review of other costs, which potential partners require before deciding to join our project.

First Nations participation has been cited as another key factor for successful Goldboro LNG development. Is this regarding the liquefaction project or the additional pipeline capacity needed to ship the gas Pieridae produces in western Canada to your east coast plant?

Sorensen: It is absolutely required for both. And we are not talking old-style benefit agreements, which promised jobs and training and suchlike, but were [largely] meaningless as they meant no more than menial jobs for the few. When we say First Nations participation, we mean an economic interest in the projects—equity stakes. That allows them to use the profits for the wellbeing of their people and the development of their communities, while aligning their economic interests with those of project developers.

The construction of new pipelines has been the Achilles heel of large-scale oil and gas projects in Canada for over a decade. Assuming successful development of Goldboro LNG, would you be willing to source gas from the Marcellus play in the US northeast if the necessary new pipeline capacity to move your gas from western Canada could not be constructed in a timely fashion?

Sorensen: It does not matter. There is presently only one way to move gas to Nova Scotia, whether from western Canada or the Marcellus, and they suffer the same potential bottleneck—a lack of capacity on [midstreamer] TC Energy’s pipeline between Montreal and the [US] border, [across which Canadian gas would have to travel before transiting New England and returning to Canada over the Maine-New Brunswick frontier]. Alternatively, you could try to move Marcellus gas further east in the US, but you would have to get past the Boston congestion.

I would like to add that the lowest cost solution would be the development of shale gas in New Brunswick, which is similar in structure to the prolific Montney play in the west. But there appears to be no political will to overturn the drilling moratorium in the province.

“Our country is much like the Holy Roman Empire, with a weak centre and strong provinces”

The original plan for your project was a large land-based liquefaction plant, but since this option was put on hold, you have proposed a smaller plant, on either land or water, based on a modular design. What are the core advantages of the smaller modular plant?

Sorensen: There are four core advantages. The first is obviously cost. We were looking at C$10bn ($7.7bn) for the 10mn t/yr land-based liquefaction facility, and that was before the recent bout of global price inflation. This compares to approximately C$3bn for a 3mn t/yr modular liquefaction plant. And it should be noted there is far greater price certainty for a modular design, as substantially more of it is constructed in a manufacturing plant.

Secondly, the previously mentioned bottleneck in TC Energy’s pipeline system in the Montreal region will only require the addition of two compressor stations to handle the smaller volume of feedgas for our modular LNG facility. This will be far easier to push through from a regulatory perspective than the looping of the pipe, which would have been needed for our larger project.

Thirdly, the modular liquefaction plant, combined with less likelihood of regulatory delay on the pipeline front, should significantly narrow the amount of time before delivery of first LNG to Europe. We are now targeting the first quarter of 2027, assuming a timely FID.

And the fourth advantage, as we have seen from [US exporter] Venture Global’s approach to LNG liquefaction development on the US Gulf Coast, we have the potential to expand production as needed in the future by adding modular liquefaction plants.

Finally, Goldboro LNG is being billed as a net-zero emissions project, with your proposed Caroline carbon sequestration project in Alberta an important part of the solution.  Are you also planning your liquefaction plant to be e-drive powered by the region’s hydroelectric capactiy?

Sorensen: That is not the plan, no. Grids can be unreliable, as we have seen even in a major power market like Texas. As a result, we will be using e-drive powered by a combined-cycle gas turbine plant, similar to most projects around the world, to ensure a reliable source of electricity. The plant will not be teamed with CCUS, but we are planning to overbuild [generation] capacity to enable us to back out coal-fired power presently produced in the region. This, along with our proposed Caroline carbon sequestration project, will make our Goldboro LNG project net zero.