Posted on: September 19, 2022 Posted by: AKDSEO Comments: 0

Repsol laying groundwork for Canadian LNG exports

Spain’s Repsol has begun laying the groundwork for the possible future export of LNG from a converted New Brunswick import facility with a September 14 application to Canadian energy regulators to extend the trigger date for exports to begin.

The import terminal has been recently touted as a possible source of new LNG exports from eastern Canada to Europe, but Repsol – which bought Irvine Oil’s interest in the jointly-owned Canaport terminal in 2021 – has said only that it would consider any and all business cases for adding liquefaction capacity to the terminal.

In May 2016, the National Energy Board – the predecessor to the Canada Energy Regulator (CER) – awarded natural gas import and LNG export licences to Saint John LNG Development Company (SJLNG). The two licences covered the import and export of natural gas from what was at the time known as the Canaport terminal, which had entered service as an import facility 2009.

Both licences carried sunset dates for the expiry of the licences 10 years after their issuance, in May 2026, unless imports or exports had commenced. In its application, SJLNG is asking the CER to extend the sunset date for both permits to May 2032.

In its application to extend the licences, SJLNG said it is “assessing the feasibility” of expanding the New Brunswick facility to include an estimated 2mn mt/yr of liquefaction capacity, well below the 5mn mt/yr contemplated when the original export application was approved.

The reduced liquefaction capacity is a function of the lack of pipeline capacity available to move feed gas to New Brunswick from western Canada or elsewhere in North America. The best SJLNG could hope for from tweaking existing pipelines is enough capacity to move about 300mn ft3/day to the terminal, enough to support 2mn mt/yr of liquefaction.

“Based on the information provided to SJLNG by the series of interconnecting pipelines that would be used to deliver natural gas to its LNG facility, it is conservatively estimated that it would take at least three years for the subject pipelines to obtain required approvals and construct the necessary facilities,” SJLNG says in the application. “This time period would also be used by SJLNG to obtain required approvals and expand its existing LNG facility.”

Given those considerations, SJLNG says in the application, the existing sunset dates for the expiry of the licences in 2026 “pose a material risk to SJLNG as numerous aspects of the proposed expansion remain uncertain and the timeline for first…LNG exports is currently unknown.”

Development timelines of a potential liquefaction and export project “have shifted” and the revised expiry date is needed to allow for commercial development of the project, SJLNG says. The regulatory process for adding liquefaction capacity would take at least three years, and likely more given the current climate in Canada opposing major energy infrastructure developments.

“A failure to approve the requested variations will have a material, adverse impact on the ability of SJLNG to advance the liquefaction project,” SJLNG says. “Maintaining the existing long-term (25 year) authorisations is critical to project development.”