Shell deal puts wind in sails of proposed Nova Scotia LNG export terminal

Promoters of a proposed $10-billion liquified natural gas terminal in Goldboro, N.S., say they have secured another source of natural gas in a deal to buy Shell Canada's Alberta Hills gas production along with three gas processing plants.

Pieridae Energy says the $190-million deal with Shell will give it a supply of 119-million cubic feet per day of natural gas all the gas it needs to get the export terminal project off the ground.

The company has not yet formally committed to build the facility on Nova Scotia's eastern shore, but the Shell deal is a major step forward.

In October, the Nova Scotia Utility and Review Board gave the regulatory green light tothe facility.

A mega project gets nearer

Pieridae CEO Alfred Sorenson has been slowly putting together the LNG project, including securing regulatory, environmental and construction permits, finding a customer in German utility Uniper and buying a junior energy company as another source of gas.

Pieridae is still negotiating with pipeline companies to move natural gas from western Canada to Goldboro, N.S.

Sorensen said in a release the Shell deal demonstrates solid progress toward its "flagship" project in Nova Scotia.

"We said we would acquire additional gas supplies for the LNG facility and we have done that. Not only does this deal help us secure the remaining conventional natural gas supply needed for the first train of the Goldboro LNG project, it makes Pieridae a major player in the Alberta midstream and upstream industry," he said in a release.

"But more than that, it creates a solid, ongoing foundation for the Company as we continue to build toward becoming the first Canadian company to market LNG off the east coast to global consumers."

The German connection

Obtaining a conventional supply of natural gas from Shell's Alberta operation satisfies a condition of the German government which has agreed to support the project.

Pieridae has signed a 20-year deal with the giant German utility Uniper for the full capacity of Goldboro's first phase,or "First Train" in industry jargon,and half the total project.

The German government has offered $4.5-billion in loan guarantees for the project provided "non-frac" gas is used to in the First Train.

"Non frac" means the gas is not produced by "fracking" or injecting water and chemicals underground to fracture seams to release natural gas.

There have been concerns about the negative environmental consequences on air, water and soil in fracked areas.

Looking for additional supply

Pieridae is still seeking additional sources of natural gas for Goldboro, including offNewfoundland and Labrador.

The company says it expects to ramp up its drilling program in the Foothills over the next four years, creating and supporting thousands of Alberta jobs.

Pieridae says the Goldboroproject would also create 3,500 jobs during construction of the LNG facility and 200 permanent jobs, making it Nova Scotia's biggest-ever mega project.