Canada’s largest natural gas producer has struck an arrangement with the largest LNG company in the U.S.

Tourmaline Oil Corp. announced Thursday afternoon it has entered into a significant long-term gas supply agreement with Cheniere Energy, Inc.

Beginning in January 2023, Tourmaline will supply 140,000 mmBtu per day (approximately 140 mmcf/d) to the Corpus Christi liquefaction terminal for a 15-year term.

The LNG netback supply arrangement provides international price exposure to JKM (Platts Japan-Korea Marker) for Tourmaline, for effectively one cargo per month.

JKM is currently trading at approximately US$12.98/mmBtu.

Tourmaline has secured long-term firm transportation with TC Energy Corporation on existing pipeline systems for total tolls of US$0.86/mmBtu, allowing Tourmaline’s natural gas from its Alberta Deep Basin or B.C. Montney complexes to access Asian LNG market pricing while further diversifying the company’s sales points for natural gas.

Corpus Christi Stage III project

Cheniere said the integrated production marketing (IPM) transaction is expected to support the development of the Corpus Christi Stage III project.

“This latest IPM agreement with Canada’s largest natural gas producer demonstrates the breadth of Cheniere’s natural gas resource supply and the range of our commercial options,” said Jack Fusco, Cheniere’s president and CEO. “This commercial agreement is expected to support our shovel-ready Corpus Christi Stage III project while enabling Canadian natural gas to reach international LNG markets. Additionally, it reinforces Cheniere’s track record of creating collaborative, innovative solutions to meet customers’ needs and supports Cheniere’s growth.”

Mike Rose, Tourmaline’s president and CEO, said: “Our long-term supply agreement with Cheniere is the next important step in [the company’s] evolving market diversification strategy. We are pleased to be supplying low-emission Canadian natural gas with Cheniere to growing international markets.” 

The Corpus Christi Stage III project is being developed to include up to seven midscale liquefaction trains with a total expected nominal production capacity of approximately 10 mtpa.

It has received all necessary regulatory approvals.