Ottawa Seeks Private Sector Solution for East Coast LNG Export to Europe

Natural Resources Minister Jonathan Wilkinson stands during question period in the House of Commons on Parliament Hill on June 23.Justin Tang/The Canadian Press

Natural Resources Minister Jonathan Wilkinson says two private-sector proposals to export liquefied natural gas from Canada’s east coast to European countries struggling to reduce their reliance on Russian fuel will have to move forward without federal funding.

Mr. Wilkinson said in an interview that Ottawa is assisting in discussions between Canadian energy companies and potential German LNG buyers. But he added that the two The energy proposals will have to stand on their own two feet and go through Canadian regulatory reviews to ensure they meet Canada’s climate goals.

“Our view is that the private sector should provide the money for these projects, and it should be done on a commercial basis,” Mr. Wilkinson said.

“We are certainly willing to assist in discussions with our friends in Germany who are looking for these types of supplies to ensure that there are long-term arrangements, contractual arrangements that provide certainty to the private sector.”

Following Moscow’s full-scale invasion of Ukraine in February, Europe began scrambling to reduce its imports of natural gas from Russia. Last week, German Vice Chancellor Robert Habeck told a crowd at an event organized by the Sueddeutsche Zeitung newspaper that Russia could begin a blockade of the Nord Stream 1 gas pipeline as early as July 11. Germany began preparing for gas rationing this winter.

Pieridae consider plan for large-scale Nova Scotia LNG project to export gas to Germany

The two East Coast proposals are being made by Pieridae Energy Ltd.’s Goldboro LNG in Nova Scotia and Repsol SA’s Saint John LNG in New Brunswick. Both companies say they are studying the feasibility of building new LNG export terminals, which could send the gas directly across the Atlantic Ocean to European markets.

Last year, the federal government rejected Pieridae’s request for $925 million in financial assistance for Goldboro LNG.

Canada currently has no operational LNG export terminals. And there is only one terminal under construction: the LNG Canada project led by Shell PLC, which will send natural gas in liquid form to Asia from Kitimat, BC. Those exports are scheduled to begin in 2025.

To realize their terminal dreams, Calgary-based Pieridae and Madrid-based Repsol will need to organize the transportation of natural gas from Alberta through a tortuous route to the East Coast. Doing this will require them to negotiate directly with the companies that operate pipelines.

“We would expect the proponent to work with the supplier of the pipeline to ensure that they really have a business case. I mean, they don’t have a business case if they don’t have gasoline,” Mr. Wilkinson said.

TC Energy Corp.’s pipeline system in Ontario would require significant upgrades and expansion, as would the TransQuebec & Maritimes pipeline system in Quebec. Calgary-based TC Energy and Montreal-based Énergir each own a 50 percent stake in TQM.

TQM connects to the Portland Natural Gas Transmission System (PNGTS), a pipeline route in New England that is 61.7 percent owned by TC Energy. The remaining stake belongs to Northern New England Investment Co.

The PNGTS, in turn, connects to the Northeast and Maritime Pipeline, which runs from New England to New Brunswick and Nova Scotia. Calgary-based Enbridge Inc. owns 77.5 percent of Maritimes and Northeast, with the rest held by Emera Inc. and Exxon Mobil Corp.

TC Energy said in a statement that it believes LNG from Canada could play a vital role in helping Europe wean itself off natural gas from Russia. “We respond to customer needs and welcome opportunities to collaborate and develop solutions to meet those needs,” the company said. “Energy projects need the support of indigenous groups, governments, regulators, communities and buyers to ensure projects are successful.”

Mr. Wilkinson said the current situation with LNG proposals on the East Coast is very different from the Trans Mountain pipeline case four years ago.

Kinder Morgan Canada Inc. sold the Trans Mountain project, including its terminal at the Port of Vancouver and plans to expand the pipeline, to Ottawa for $4.5 billion in 2018, after years of failed or stalled energy proposals in Canada.

“Trans Mountain was not intended to be a grant,” Mr. Wilkinson said. “Trans Mountain was because there was a lot of risk in the project and the proponent decided that he just wasn’t willing to take that kind of political risk.”

When it comes to the East Coast proposals, he said, proponents will need to meet Canada’s net-zero carbon dioxide emissions targets by 2050. “We are willing to try to help with the regulatory process. We are ready to help with the counterpart in Germany or anywhere else in Europe, but our opinion is that the private sector should provide the capital”.

Timothy Egan, president of the Canadian Gas Association, has written four letters to Prime Minister Justin Trudeau since March in hopes of drawing more attention to Canada’s opportunities to export LNG. “While we stand ready to comply, we require an assurance from the government that the regulatory process will not delay or hinder development,” Egan wrote in his latest letter, which he sent Thursday.

Meanwhile, the Sierra Club Canada Foundation and the Council of Canadians are urging the federal government to reject any new LNG projects in Canada. “Instead of fueling gas expansion, Canada should be increasing renewable energy to protect consumer wallets, future-proof our economy and protect our climate,” Gretchen Fitzgerald, director of national programs for the Sierra Club, said in a statement. release.

Mr. Wilkinson said that Pieridae and Repsol still have a lot of work to do as they examine how best to build their respective export terminals and how to persuade TC Energy and other companies to make the necessary upgrades to the pipeline systems.

The pipeline companies At a minimum, it will need to add compressor stations, and it will probably also need to install new pipelines to meet the additional demand that the proposed terminals could create.

“We’re certainly interested in seeing one of them make a final investment decision and we’re trying to help them reduce uncertainty about some of the upgrades, for example, that would be necessary,” Mr. Wilkinson said.

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