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Canada's Canaport LNG import terminal keeps re-export option open

Highlights

Canada's first LNG import and regasification facility, Canaport LNG, is keeping its options open to convert its existing terminal at New Brunswick into a re-export project to cash in on seasonal variations in prices, company spokeswoman Kate Shannon said Thursday.

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The company has already received regulatory approval from the province's Department of Environment to load carriers with LNG stored in its tanks. It also has approval from federal regulator National Energy Board, which granted a short-term order to majority stakeholder Repsol to export LNG from the facility, Shannon said.

Canaport however, has no timeline or specific plans as yet to make the conversion, Shannon said, noting the approval of our application "means we have the option to re-load vessels should we see the need."

But if takes the re-export option, Canaport LNG will re-program the distributed control system without making any physical modifications or carry out additional construction at the terminal.


The company's terminal has the necessary equipment to load LNG onto tankers and the process will remain the same, but in reverse, Shannon said. "We will use existing equipment and all existing safety processes will remain in place," she said.

Spain's Repsol owns a 75% stake in Canaport LNG and Irving Oil 25%. The terminal, which started operations in mid-2009, has a nameplate capacity of 1.2 Bcf/day and transports gas via pipelines to customers in eastern Canada and the US.

Lisa Harrity, a spokeswoman with the New Brunswick government, said the permission granted to Canaport is for a maximum loading of 120 tankers each year or the equivalent of about 7 million mt/year depending on the size of carriers.

"We recently had an EIA (Environmental Impact Assessment) filed by them and it involved conversion from an import-only facility for transfer and storage of LNG, to a facility that could also handle the transfer of LNG onto ships," she said Thursday in an e-mail.

SEASONAL PRICE CHANGES

A prime driver behind Canaport LNG's re-export plans is to seek "alternate sources of revenue, amid a low-demand climate for regasification," the company said in its EIA report submitted this summer to the New Brunswick government.

Canaport LNG is aiming to be more flexible and competitive in a changing LNG global marketplace, the company said in its submission, adding the North American natural gas market has experienced a tremendous boom from shale gas growth, resulting in Canaport facing a decline in the amount of piped natural gas it supplies from the facility.

"This widespread growth, being driven by technology, has now tipped the scales to the point where natural gas prices have decreased substantially in North America in comparison to other jurisdictions," Canaport said.

"North American LNG import or gasification terminals that were on the books for development are now being redesigned as liquefaction terminals or bi-directional terminals."

Canaport's re-export option mirrors that of other LNG terminal operators in the US Gulf Coast, Spain, South Korea, France and Belgium.

"Terminal operators are essentially looking for business," said a UK-based LNG analyst, who did not want to be named. "Managing seasonality of demand and pricing during spring and fall can be a way of making money."

In the first 11 months of this year, Canaport imported seven cargoes from Qatar and Trinidad and Tobago totaling about 700,000 mt, according to the analyst.

"The terminal capacity is 10 times larger than that and there could be a case for Canaport making the U-turn and becoming an LNG re-exporter. One option would be to target the Latin American market, particularly Argentina. But taking cargoes to Europe will be a bit far-fetched," he added.

--Ashok Dutta, newsdesk@platts.com
--Edited by Irene Tang, irene.tang@platts.com