Is a proposed East Coast LNG facility a viable destination for Western Canadian producers?
Paul MacLean says that the Bear Head LNG facility is alive and well, despite the company being very quiet about the project in 2017.
“We’re only going to make an announcement when there is something of note to announce,” says MacLean, who is Bear Head LNG’s strategic and regulatory affairs advisor.
The project was brought to life in 2014 when Liquefied Natural Gas Limited bought the site, located on Cape Breton Island, from Anadarko Petroleum. Bear Head LNG is a subsidiary of Australia-based LNG Limited. It’s proposing to build an export facility capable of producing eight to 12 million tonnes of LNG annually. It has received regulatory approval from the National Energy Board to export that amount. However, the company hasn’t committed to building it and MacLean can’t say when that might happen. “I can’t give you a date on a final investment decision,” he says.
Perhaps that’s because there is a lot of uncertainty about the future of a LNG industry in Canada. Two major projects slated to be built in B.C.—Petronas’ Pacific Northwest LNG and Nexen Energy’s Aurora LNG—were cancelled last year (a third West Coast LNG export project, LNG Canada, is still in play.) But that may work in Bear Head LNG’s favour. MacLean says with producers in Western Canada looking for markets to sell their gas into, shipping gas to the East Coast, liquefying it and then exporting it is of interest with West Coast LNG export options dwindling.
MacLean says there is “significant” pipeline infrastructure in place to get natural gas from Western Canada to Nova Scotia. “When we bought the project we thought the low-hanging fruit was to access natural gas from the Marcellus and Utica basins in the U.S.,” MacLean says. “But pipeline approvals in the northeast U.S. have been so challenging, we’re focusing most of our energy on sourcing natural gas from Western Canada.”
Bear Head doesn’t have any gas supply or customers locked up for Bear Head LNG. However, while LNG prices have fallen because new supply, mostly from Australia, has come online and buyers are looking for shorter, cheaper contracts, demand is expected to grow and some analysts predict a “second wave” of projects will be required by 2022-2024 to meet global LNG demand. “We anticipate Bear Head LNG can match up with that second wave of demand.” MacLean says.