Tourmaline To Achieve A Canadian First In Natural Gas Export

An agreement with Cheniere Energy Inc. will help Tourmaline Oil Corp. break new ground in the international market next year.

Last year, Tourmaline established a U.S. Gulf Coast liquefied natural gas (LNG) long-term netback supply agreement with Cheniere, an international energy company headquartered in Houston, Texas.

Cheniere’s Sabine Pass export terminal in Louisiana made history, shipping the first U.S.-produced LNG export in 2016.  

In 2023, Tourmaline will become the first Canadian exploration and production company participating in the LNG business with full exposure to Japan Korea Marker (JKM) pricing. This provides a material increase to anticipated 2023 cash flow based on the Feb. 15, 2022 JKM strip pricing, said the company in its 2021 fourth quarter report.

“We are very excited to be Canada’s first E&P company to export natural gas through our gas sales agreement with Cheniere starting [in] 2023,” Jamie Heard, Tourmaline’s manager, capital markets told the DOB

“Recent events in Ukraine have clearly underscored the need for Canadian natural gas in both Europe and Asia, and we hope this encourages additional LNG development throughout North America so that Tourmaline can provide the world with more clean and secure natural gas supply.

“Embracing the development and export of our natural gas resources in Canada will ensure a cleaner global energy profile through the displacement of coal, and also provide energy security and stability to nations exposed to conflict or reliant on unstable interruptible power sources, through the decades-long energy transformation ahead of us,” Heard continued.

During a conference call covering Tourmaline’s Q4 report, the company’s president and chief executive officer Michael Rose was asked by a caller, citing “shortages around the world” if there are any initiatives the company is looking at to get into the LNG space to a greater degree, in addition to the Cheniere deal.

“[With] the Cheniere deal, I guess we’ll be the first Canadian company actually able to ship gas to Europe,” said Rose. “Where those cargos go, we’ll see. That starts in January [2023].”

“We are looking at as many other LNG opportunities as we can,” said Rose. “To grow our Canadian LNG business, we need more pipelines and more projects. But we are looking at all the various opportunities to move gas offshore and get it to Europe and of course Asia — that’s where we can accomplish the greatest emission reduction possible.”

Rose called natural gas the “great enabler” of a future energy transformation.

“Canada should be supplying as much of our low-emission natural gas to the rest of the world through a material and growing LNG business,” he added. “It’s the best thing we can do for global emissions and for the Canadian economy.”

Reducing emissions

In 2021, Tourmaline started a joint venture with Trican Well Service Ltd. to use the first Tier 4 natural gas frack unit in Canada, displacing most of the diesel consumed during frack operations with company-sourced natural gas.

The Calgary-headquartered oilfield services provider upgraded its first fracturing fleet with CAT Tier 4 Dynamic Gas Blending (DGB) engines in the fourth quarter of 2021.

Trican says these engines displace up to 85 per cent of the diesel used in a conventional pumper with clean-burning natural gas.

Tourmaline made strides toward its environment-related goals in 2021. Last year it achieved its net 25 per cent methane reduction target, three years ahead of schedule.

“We’re not done there,” said Rose. “We have set new methane reduction targets and we will execute on those, as well.”

Tourmaline says it intends to invest $20 to $40 million per year on environmental performance improvement initiatives.

The company has had an engineering team in place for three years developing and implementing new proprietary emission technologies, among other environment-focused advancements.

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