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US DOE export decision moves Nova Scotia LNG project ahead

A recent favorable decision by the US Department of Energy means a proposed project designed to export up to 10 million mt/year of LNG from the coast of Nova Scotia needs only two more export permit approvals, the project developer said Tuesday, adding it continues to target first gas in early 2020.

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The DOE on Friday granted Pieridae Energy USA Ltd. long-term multi-contract authorization to export gas to Canada, both for end use there and for use to create LNG for export from Canada to countries with which the US has entered into a free trade agreement.

Pieridae, which had applied for permission to export 292 Bcf/year of natural gas (800 MMcf/d) via the Maritimes and Northeast Pipeline system from a border crossing near Baileyville, Maine, plans to process the gas at its proposed LNG liquefaction facility in Goldboro, Nova Scotia, and then export the LNG to FTA countries.

Under current US law, the DOE is required to quickly grant permits to export gas to FTA countries, but most review non-FTA applications to ensure that exports would be in the national interest.


In an interview Tuesday, Mark Brown, Goldboro LNG project developer, said the DOE's permit marks the latest milestone on the path to building Nova Scotia's first LNG export project.

"We have environmental assessment approval. We need a non-FTA permit and that application is in front of the US DOE, and we also need a long-term export license from the (Canadian) National Energy Board," he said.

"We're just about to ramp up the front-end engineering and design and we're still aiming for a final investment decision in the second quarter of 2016," Brown said.

"We will then commence construction and get ourselves to deliver first gas in the first quarter of 2020," he said.

In addition to the liquefaction facility, the project would include three 230,000-cubic-meter storage tanks, an access road, berthing for tug boats and a construction jetty.

The company estimates the project could cost anywhere from C$5 billion to C$10 billion (US$4.02 billion-US$8.04 billion).

In June 2013, Pieridae said it had signed an 20-year sales agreement to start delivering 5 million mt/year, half of Goldboro LNG's output, to German utility E.ON in the first quarter of 2020.

Brown said the project developers hope to take advantage of the proposed facility's relative proximity to Europe to export LNG to markets on that continent, as well as to markets in South Asia, via the Suez Canal, and to South America.

MOST SUPPLY LIKELY TO COME FROM US NORTHEAST: BENTEK

The Goldboro LNG project also is situated to be able to access supplies of gas from "both offshore Atlantic Canada and onshore Atlantic Canada and the United States from the Marcellus," he added.

"The M&NE pipeline runs through our property. Goldboro is the beginning of that pipeline currently as it comes from Sable Island," Brown said.

The M&NE pipeline was originally designed to bring gas produced off the coast of Nova Scotia to markets in the US Northeast. But disappointing production volumes in more recent years from the Nova Scotian offshore, coupled with the dramatic increase in gas output in Northeast US plays such as the Marcellus and Utica, increasingly has led to flows of gas on the pipeline moving from the US to Canada, rather than vice versa.

Although the offshore Nova Scotia platforms Deep Panuke and Sable Island will likely provide some of the gas destined for export by the Goldboro LNG project, "the reality of it is the majority of that supply is actually going to come from the Northeastern United States," said Dustin Albright, an analyst with Platts unit Bentek Energy.

Last December, Deep Panuke's owner, Encana, announced that the platform would be converted to seasonal production, to flow gas only during the higher-demand colder months.

When both Sable Island and Deep Panuke are at full production, the average output of both only ranges between 150 MMcf/d and 205 MMcf/d, Albright said.

"Sable Island and Deep Panuke barely produce enough for Nova Scotia. In fact we're seeing flows from the Northeast into Nova Scotia this summer, because Deep Panuke is closed in," he said.

--Jim Magill, jim.magill@platts.com
--Edited by Lisa Miller, lisa.miller@platts.com