Canada’s Pieridae says Goldboro LNG still lives [Update]
The lone surviving LNG project on Canada’s east coast, Pieridae Energy’s 10mn metric tons/year Goldboro project in Nova Scotia, is not nearly as dead as many media reports over the past few weeks have implied, the company suggested in its Q2 2021 report August 12.
In early July, Pieridae said cost pressures, along with ongoing Covid-19 concerns, made the project, in its current form, “impractical”. A few weeks later, the company said it would review strategic alternatives to enhance shareholder value – often code for a possible asset sale or merger arrangement.
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But in the company’s latest quarterly report, CEO Alfred Sorensen indicated that the estimated C$9bn (US$7.2bn) project was far from dead.
“We recently announced a step change in our approach to the Goldboro LNG project as we analyse options that could make a reconfigured LNG initiative more compatible with the current environment,” he said. “Those options might include a floating LNG project, one with proven technology that drastically reduces GHG emissions; involves clean, electric-drive turbines and reduces capital costs substantially compared to our former project, while maintaining a projected healthy rate of return.”
A floating option, incorporating two trains totalling about 2.8mn mt/yr, makes sense on a number of levels, a Pieridae spokesman told NGW: emissions would be much lower, at about 300,000 mt/yr versus 3mn mt/yr for the on-shore option, there would be no need for a large workforce accommodation camp (a smaller facility for about 150-200 workers would suffice, and could also be executed under an existing benefits agreement with the Mi’kmaq First Nation), there would be no need to re-align a nearby highway, turbines could be electric drive, and feed gas requirements would be reduced to 400mn ft3/day from 800mn ft3/day under the original proposal.
Sorensen said Goldboro’s fundamentals – robust European demand for LNG, high global LNG prices, indigenous participation, a pathway to net zero emissions, and support from jurisdictions across Canada – continue to drive Pieridae’s efforts to find a partner for the project. And if a floating option is pursued, it would lobby again for support from the Canadian government, which recently announced a C$5.2bn bailout of a struggling hydroelectric project in Newfoundland and Labrador.
By failing to meet a June 30, 2021 deadline for a final investment decision, Pieridae also faces the prospect of losing its customer for virtually all of the output from Goldboro’s first 5mn mt/yr train. Germany’s Uniper is now in a position to walk away from that take-or-pay contract, but hasn’t yet provided any notice that it wishes to terminate the arrangement.
While Pieridae’s strategic review continues, it’s working to optimise its upstream assets, a critical component to what the company calls the first Canadian-owned integrated LNG project.
During the second quarter, a major part of those upstream assets, the Jumping Pound gas complex west of Calgary, was undergoing a C$18.5mn scheduled maintenance turnaround, which took about 3,309 barrels of oil equivalent/day out of Pieridae’s production profile.
As a result, natural gas production fell to 194.2mn ft3/day from 208.7mn ft3/day in the second quarter last year, while liquids production – natural gas liquids and condensate – fell to 6,033 barrels/day from 9,009 b/d.
For the three-month period, Pieridae reported a net loss of C$10.06mn, down from the C$13.4mn loss in the second quarter last year. Net operating income, however, remained in the black, at C$14.4mn versus C$19.3mn in Q2 2020.