Page 6 - NorthAmOil Week 12 2023

NorthAmOil COMMENTARY NorthAmOil

Repsol scraps plans for LNG

terminal on Canada’s East Coast

Spain’s Repsol is abandoning plans to develop an LNG export terminal on Canada’s

East Coast, citing cost concerns

NEW MADRID-BASED Repsol has decided against Repsol spokesperson in a statement.
BRUNSWICK developing an LNG terminal on Canada’s East Following Repsol’s announcement, the Pre-
Coast. The terminal would have exported LNG mier of New Brunswick, Blaine Higgs, said he
WHAT: from Saint John in New Brunswick, Canada to was disappointed but was not completely sur-
Spain’s Repsol is Europe. The move highlights the Ottawa gov- prised but was aware of the high costs.
abandoning plans to ernment’s mixed message on LNG exports to “I was anticipating something that would be
develop an LNG export Europe. probably unattractive economically, but obvi-
terminal on Canada’s The Spanish company cited the high costs of ously [am] disappointed,” Higgs told reporters.
East Coast. shipping additional gas by pipeline to the Saint “At this point [Repsol is] certainly not able to
John LNG terminal, adjacent to an Irving Oil proceed because of high costs of gas supply.”
WHY: refinery. Repsol’s decision may also put an end in the
The company cited the medium term to Higgs’ long-term ambition
high costs of shipping Challenges to revive shale gas development in New Brun-
additional gas by pipeline The Saint John LNG facility currently imports swick. But he denied the concern, telling report-
to the proposed terminal. LNG and regasifies it. It also imports gas by ers that provincial shale gas could “meet our
pipeline from the North-Eastern US. Repsol had own needs and those of allies in Europe.”
WHAT NEXT: been planning to add an LNG export terminal by Some were not convinced. “[Repsol’s deci-
Ottawa has indicated that around 2026. The new terminal would have dual sion] would not be good news, for sure,” the
it would rather export regasification facilities plus a liquefaction unit. president of the Halifax-based gas trading firm
hydrogen to Europe than New pipeline capacity would have been Energy Atlantica, Todd McDonald, told CBC.
LNG. needed for Saint John LNG to import enough “It would have given a lot of motivation to
gas for an export facility. Plans for developing develop shale gas, because you had an instant
or expanding pipelines in Canadian provinces [European] market with access to high prices.”
and the North-Eastern US have faced opposi- McDonald also noted how volatile gas prices
tion and high regulatory hurdles. have been. The price of gas after Russia’s inva-
Most of Canada’s natural gas is produced sion of the Ukraine in February 2022 jumped
in Western Canada, thousands of kilometres in Canada more than eight-fold, although it has
away from the East Coast. Canada is the world’s since dropped almost to pre-invasion levels, he
fifth-largest gas producer. said.
In the US, gas is produced in the Marcellus Europe has been seeking LNG as it shifts away
and Utica shale plays in the Appalachians from importing gas from Russia because of the
“Following a study carried out by the com- war in Ukraine. In 2021, Russia exported about
pany, it was determined [not to] continue with one-third of the European continent’s needs, or
the Saint John liquefaction project as the tolls 15bn cubic feet (425mn cubic metres) per day.
associated to it made it uneconomical,” said a The Saint John LNG terminal has had a

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