Tap the potential of Canaport LNG3/5/2013
Spectators to the sale of Repsol’s natural gas assets have speculated for months whether the deal would help or hinder foreign interest in buying Saint John’s Canaport LNG facility Repsol recently ended the suspense by selling its LNG contracts to Shell for $6.7 billion; the sale excluded Canaport LNG.
This decision frees Repsol to sell its 75-per-cent interest in Canaport LNG to investors who are interested in converting it to an export terminal. This brings Saint John and New Brunswick a big step closer to becoming the region’s energy export hub.
In a report last year, Atlantica Centre for Energy president John Herron asserted that Canaport LNG already has the infrastructure required to serve as the world’s first import-export LNG terminal. This infrastructure includes a protective jetty in a working, deepwater port; storage tanks and the potential for more storage capacity underground; proximity to New Brunswick natural gas, plus connections to an international gas pipeline, backed by 25-year leases that enable the company to move a specified volume of gas per year to the northeastern United States. Retooling the facility to export gas would cost an estimated $2.5 to $4 billion, and require a renegotiation of gas leases to permit a reversal of flow in the Maritimes and Northeast and Emera pipelines. This is still considered economically feasible, because it would enable investors to buy North American gas at prices that have been lowered by a glut of production, then sell it for several times the base price in the growing Asian gas market.
The fact that Canaport LNG has a functioning, fairly new import terminal makes it the leading candidate for development on the east coast; and at this point, west coast export terminal proposals are entirely hypothetical, since no suitable terminal exists, nor does the pipeline access needed to transport Canadian and American gas to more lucrative international markets.
Canaport LNG’s potential value as an exporter has already attracted attention from investors in India, China, Russia, France, Britain and Spain. We believe it is only a matter of time before a firm refurbishment plan and purchaser emerge, securing this facility’s future for the next two decades.