Energy company scraps the idea of shipping LNG to Europe, citing the costs involved
Spanish energy company Repsol says it will not expand its LNG terminal in Saint John to export liquefied natural gas to Europe because the costs involved make the project unviable.
Europe faced a severe supply crisis last year as it weaned itself off Russian oil and gas following Moscow’s unprovoked invasion of Ukraine.
As they scrambled to replace Russian gas, Germany and other EU members turned to Canada as a possible solution to their supply problems.
Repsol’s current import terminal in Saint John, New Brunswick was considered as an option to export natural gas across the Atlantic.
But Bloomberg News First reported, the company believes the project is too costly. Company spokesman Michael Blackier told CBC News that Repsol had conducted a feasibility study on the project.
“The total cost of transporting the gas to our terminal is too high,” Blackier said in an email to CBC.
US LNG exporters increased shipments to Europe by more than 137 percent in the first 11 months of 2022 – an increase that has resulted in tens of billions of dollars in new revenue, according to US Energy Information Administration (EIA) data.
That’s what Federal Chancellor Olaf Scholz said during his visit to Canada last summer open to the idea of accepting more gas from Canada but added that the country lacks infrastructure and a proven business model to boost exports across the Atlantic.
Over the past decade, companies have built 13 LNG export terminals on Canada’s West Coast and five on the East Coast.
These projects failed for various reasons.
EU Commission President Ursula von der Leyen During her last visit, she threw cold water on the idea that Canada could export more natural gas to Europe.
Both Scholz and von der Leyen have expressed interest in sourcing clean hydrogen energy from Canada.
“We will continue to support our European friends and allies to accelerate their clean energy transition and eliminate their dependence on Russian energy,” a spokesman for the Office of the Secretary of Natural Resources, Jonathan Wilkinson, told CBC in an email.
“In the case of [Saint] John LNG, the project’s proponent, has informed us that his assessment concludes that there is no business case as the cost of transporting gas over the significant distances is high [is] too high to support the project economy.”
The New Brunswick government hoped that an expansion of the Saint John terminal could provide rationale for ending New Brunswick’s moratorium on shale gas development.
Gas from New Brunswick is a “possible solution” for Europe, Prime Minister Blaine Higgs said last spring, adding that it is less expensive than gas transported long distances via pipelines to a terminal in Saint John.
CBC reached out to the New Brunswick government for a response but received no response as of the time of publication.