Maritimes Opens Door to New LNG Supply

Maritimes & Northeast Pipeline started an open season process on Tuesday to test the market for a possible expansion. The expansion would be designed to bring new gas supply potentially from offshore development and from liquefied natural gas (LNG) import terminals planned in Atlantic Canada to markets in eastern Canada and the northeastern United States. The open season ends March 31.

Maritimes canceled its Phase IV expansion project last year after EnCana decided that its 400 MMcf/d Deep Panuke discovery offshore Nova Scotia would not support a 20-year pipeline transportation agreement. However, analysts say EnCana is still in talks with the Sable Offshore Energy Project (SOEP) producers to possibly utilize some of their pipeline facilities. EnCana also may see economic efficiencies on pipeline capacity from the numerous LNG terminals being planned in the region.

Maritimes said the open season is mainly in response to interest shown by LNG suppliers and proponents of offshore development projects that could connect to the pipeline.

About 4.5 Bcf/d of new LNG supply is planned in the region by about six proposed terminals, only one of which has been approved by regulators:

  • Irving Oil's 1 Bcf/d Canaport LNG terminal in St. John, NB was approved by Canadian regulators last August and is expected to be in service sometime next year;

  • Anadarko's 1 Bcf/d Bear Head terminal proposed in Point Tupper, NS, has received environmental approvals and is expected to be in service in November 2007;

  • TransCanada and PetroCanada are planning the 500 MMcf/d Cacouna Energy terminal in Riviere du Loup, PQ;

  • Enbridge, Gaz Metropolitain and Gaz de France have filed permit applications for their 500 MMcf/d Rabaska LNG terminal near Quebec City;

  • Keltic Petrochemicals reportedly is planning a 1 Bcf/d terminal in Goldboro, NS; and

  • Quoddy Bay LLC is planning a 500 MMcf/d terminal at Pleasant Point, ME.

  • "Atlantic Canada and New England would greatly benefit from an LNG terminal development as an additional source of natural gas supply, which will be helpful in securing the region's future energy needs," said Maritimes President Doug Bloom.

    Bloom said the 850-mile pipeline can be economically expanded through the addition of new compression and pipeline looping. The company put its Phase III expansion project into service in December 2003, extending its system about 25 miles to Algonquin's HubLine system in Beverly, MA. The extension provided about 230 MMcf/d of capacity but Maritimes' U.S. mainline remained at 440 MMcf/d.

    Meanwhile, the results of further development offshore Nova Scotia by the Sable producers have been somewhat disappointing. Shell cut its Sable reserves by about 670 Bcf. And production has lagged forecasts. Despite the start-up of SOEP's Alma field in December 2003 at 120 MMcf/d, production was down about 35% early last year from a peak of 555 MMcf/d reached in December 2001, according to Lehman Brothers. An additional 125 MMcf/d of Sable production is expected to come from the South Venture field early this year.

    Meanwhile, EnCana is beginning new exploration around Deep Panuke, which would yield 400 MMcf/d if brought online.

    For more information about the Maritimes open season, contact Rob Whitwham, director of marketing and business development, at (902) 425-0628. Maritimes is owned by affiliates of Duke Energy (77.53%), Emera Inc. (12.92%) and ExxonMobil (9.55%).

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