Demand for natural gas in Europe related to the war in Ukraine is elevating the profile and prospects for New Brunswick and Nova Scotia LNG export projects

European countries are seeking access to natural gas from stable countries to enhance energy security while contributing to climate goals. Due to geo-political decisions to reduce reliance on Russian natural resources, there is a worldwide increase in demand for LNG and shortage of supply. This, in turn, has forced the price of the commodity to increase considerably and opened the doors for investment in new export projects.

Atlantic Canada has been hyped recently for the potential role it can play to help due to its geographic proximity to European markets. Several LNG export facilities have already been approved for development in Atlantic Canada but have never moved forward; the current situation has reignited a lot of interest, but can we really make it work?

The latest announcement by Texas-based Buckeye Partners to acquire Bear Head at Port Hawkesbury, and the federal government opening discussions with Pieridae regarding the proposed Goldboro LNG project in Nova Scotia as well as the Repsol-owned Saint John LNG site in New Brunswick, have garnered a lot of political, media and public attention.

There are several reasons why these export projects have been sitting idle or on hold. One key factor affecting development is limited access to a source of natural gas. In our region, natural gas must come from other parts of North America based on an effective moratorium with respect to new natural gas development in New Brunswick and Nova Scotia.

Current access to natural gas in the region is also heavily constrained by existing pipeline capacity and prohibitive ‘wheeling’ or transportation costs. New Brunswick and Nova Scotia are at the end of the North American natural gas transmission system and constrained by bottlenecks in New England. Western Canadian natural gas must travel through the U.S. for delivery here in the Maritimes.

Additionally, building a liquefaction terminal for export is costly; it would require a long-term commitment with significant upfront capital costs. Investments in infrastructure such as this might also be considered in our future transition to utilizing hydrogen as a clean energy solution.

The other major influence is time. Building the infrastructure for the liquefaction process cannot happen overnight. A facility such as this could take 4 to 5 years to design, licence and develop, requiring a long-term commitment for large-scale production to make the upfront capital investment economic. To date, no one has been able to make it work here in Atlantic Canada.

So, is it possible? Yes, but not without time, a great deal of money, public and private-sector policy and regulatory alignment, and a strong commitment to enable consistent access to a viable and sustainable supply of natural gas.

However, given current the global geo-political energy challenges presented by the war in Ukraine and the needs of our European trade and security partners, there has never been a better time for us to figure out how to make it work.