Costs Push Pieridae Into New Plans For Goldboro LNG Project
Fresh from the conclusion of a strategic review, Pieridae Energy Limited is considering an on-water alternative for a liquefied natural gas (LNG) project in Eastern Canada.
The original concept of the Calgary-headquartered producer’s onshore LNG plant at Goldboro, Nova Scotia — estimated at a cost of $10 billion — aimed to process 10 million metric tonnes annually.
“We decided it wasn’t something that we’re likely able to finance and started looking at alternatives,” says Alfred Sorensen, Pieridae’s chief executive officer, in an interview with the Bulletin.
“We focused on something that perhaps Pieridae could do more, given the size of the company.”
The newly-conceptualized project could produce roughly two-to-2.5 million metric tonnes annually, about 400 mmcf/d, to be exported to Europe.
This volume depends on the transportation available on the TC Energy Corporation pipeline network from the Western Canadian Sedimentary Basin (WCSB).
“What we are focused on right now is the path of least resistance,” says Sorensen. “We have been looking at alternatives between the existing floating vessels that we could move to Goldboro, all the way to constructing a new vessel that will perhaps meet our goals better.”
The capital expenditure for a new floating LNG build is expected to be around $2 billion. If the company chooses to lease instead, that cost reduces significantly.
In either case, the project will be net zero, says the company. This will be achieved through a project the company is developing to capture three million tonnes of CO2 per year. A complex, located at Pieridae’s Caroline facility in Alberta, will combine large-scale carbon capture and sequestration and blue power production.
Among Pieridae’s objectives for its modified LNG project is to have it onstream “as soon as possible, at the lowest cost possible,” says Sorensen.
“We want to be able to have an economic project. These are long-term assets, so you’re looking at 20 years of deployment of asset.”
To that end, a timely entry into the marketplace is important.
“We are in an environment where cost structure is moving significantly,” Sorensen says. “That means, we want to be able to manage that cost structure, as well, and as effectively as we can.”
Building a new facility onshore would take about five years, while a ship-based solution approximately cuts that time in half.
The company is presently considering factors such as the size of vessel available and its cost structure, timing for delivery, and any work that needs to be done on the existing pipeline system to move gas from Western Canada to Goldboro.
“The timing on the pipeline is influenced by how much work needs to be done in Eastern Canada on TC Energy and relationships we can develop with potential First Nations partners that we hope will reduce the amount of risk around starting a pipeline project,” says Sorensen.
Conversations with potential First Nations partners have started but engagement will pick up once the company can answer questions related to vessel size, the market, and their ask of TC Energy for this project.
Russian influence
The role of energy export to Europe has escalated in recent months with accusations that Russia has leveraged its role as a major supplier by intentionally disrupting gas supply during its dispute with Ukraine.
“Looking back in time, the first time we started talking to the Germans and the results were a contract we had with them, it was always about diversifying risk away from Russia,” Sorensen says. “I think, at the time, it was on the horizon. You could see a problem coming but you didn’t need to be too worried about it.
“Well, that problem has now come over the horizon and is very close to creating significant issues for all the European Union.”
He says that it’s unfortunate the company was unable to attract financing for its LNG project three or four years ago, adding “this project would have probably been very helpful.”
“I think what has really come out of the Ukrainian-Russian issues is that there is an absolute shortage of energy in the world,” says Sorensen. “That’s why the Russians are able to impact decision-making in European capitals, because there is no cheap alternative to replace all of that Russian gas.
“Even in this environment, where there’s a view to moving away from fossil fuels, in a very short period of time, we have seen the pendulum move back in the other direction. Natural gas is still going to play a role over a long period of time,” he adds. “I think that’s the key lesson coming out of this current dispute.”
- Categories:
- Exports and Imports
- LNG
- Natural Gas
- Companies:
- Pieridae Energy Limited
- TC Energy Corporation