Repsol LNG Deal Falls Through
SAINT JOHN — Repsol will not be moving forward with plans to bring natural gas from western Canada into the Saint John LNG terminal for shipment to Europe, according to reports.
In a meeting with Natural Resources Minister Jonathan Wilkinson last week, the company told the federal government and project partner TC Energy that its feasibility study had deemed bringing natural gas to the facility for shipment to be too expensive, and would require new pipeline capacity.
That leaves the fate of the facility, which was recently granted an extension on its start date for its natural gas export licence from 10 to 14 years, in the air regarding natural gas exports. That gives the company until 2032 to come up with an economically viable plan to get natural gas to the terminal, should they decide to look for alternatives.
In a media availability on March 17, Premier Blaine Higgs said the decision by Repsol, and other world events, “heightens the awareness of the need for [New Brunswick] to have energy security here based at home.”
“It’s more important than ever, and the timeliness is more critical than ever, to say we can develop our own source of domestic supply, with the First Nations being key partners in that development, in order to get energy security, meet our own needs, but also meet the needs of our allies in Europe.”
Higgs said that Repsol was clear in its statement that it was the cost of bringing the natural gas into the Saint John facility from so far away that was causing the economic problem for the project.
“The tolling fees are just too high, and they were very clear that that’s why the project was not viable,” Higgs said. “It’s a gas supply shortage, or problem, and we have a solution here in New Brunswick.”
Higgs went on to make his case that even if shale gas was not yet fully developed in New Brunswick, the proximity to the terminal would mean the tolling phase on the pipelines would be reduced. He added that significant natural gas pipeline infrastructure already exists in the province to the terminal, going through the areas with the natural gas deposits, specifically around Sussex and in Albert County.
Higgs said the estimate of the deposit in those areas is a trillion cubic feet of gas supply and that there are working wells there right now, in addition to capped wells which could be put online easily.
“It would require more wells, there’s no debate on that. But the ability to ramp up production is a year and half, two years, away,” he said. “The ability for the plant to convert to an LNG export facility would be at least three years away.”
Higgs maintained that by increasing natural gas production in that area, it would hasten the shutdown of coal plants and “reduce emissions by about 25 percent” by allowing plants in Belldune and in Nova Scotia to stop using coal and start using locally produced natural gas instead.
The calls to replace plants like Belldune entirely with solar or wind energy are missing the ‘gap’ energy supply that fossil fuels provide as compared to green technologies. He says that gap will be filled by fuels like natural gas, and it would be better for New Brunswickers if we supplied that gas ourselves, rather than import it from unfriendly countries like Russia.
“A lot of people look at gas and say: we don’t want to use any more fossil fuels,” Higgs said. “The reality is, we won’t have a choice in order to maintain supply of energy.”
He said that during the recent two-day cold snap at the start of 2023, New Brunswick’s power was shut off from Quebec and NB Power was using all of its resources to maintain the electricity grid to help people heat their homes during that time.
“If any one of those had been shut down at that time, we would have been starting to curtail power consumption….that’s how tight the system can be.”
But in order for development to happen, First Nations must be on board with the process.
“[For shale gas development] you need a developer to come in. If we’re in partnership with First Nations this can happen. We obviously can’t do it independently, and we obviously won’t do it without having First Nations being part of it.”
“My hope is that can become a reality sooner rather than later.”
Alex Graham is a Huddle reporter in Saint John. Send her your feedback and story ideas: [email protected].