The Quoddy Tides

Eastport, Maine

2010 Oct 22

Canaport signs LNG contract

by Edward French

The Saint John LNG terminal earlier this month picked up a new contract to help ensure its supply of natural gas. On October 7 Repsol and Qatargas signed a multiyear agreement under which Qatargas will supply liquefied natural gas to Repsol Energy Canada Ltd. at the Canaport LNG facility.

"The new LNG supply from Qatar strengthens Repsol's position in the Canadian and northeast U.S. markets as a reliable, diversified, flexible supplier of natural gas," said Benjamin Palomo, executive director of LNG for Repsol. The agreement will allow Qatargas to deliver LNG to Canaport LNG using both QFlex and QMax ships. The QMax and QFlex vessels are the largest LNG tankers in the world, with capacity to carry the equivalent of approximately 5.6 and 4.6 billion cubic feet (bcf) of natural gas, respectively.

Qatar, the world's leading exporter of LNG, has the third largest oil and gas reserves in the world, about 14% of the world total, with oil reserves of approximately 15 billion barrels and over 900 trillion cubic feet of natural gas reserves.

Canaport LNG was opened in June of 2009 as the first land based LNG receiving and regasification facility to be built in over 30 years on North America's Atlantic coast. Repsol has delivered over 100 bcf of natural gas to the northeast U.S. since Canaport LNG opened. Canaport has a maximum capacity of 1.2 bcf per day, so it has operated at about 18.5% of its capacity.

Repsol can supply as much as 20% of the natural gas demand in New England and New York from the Canaport LNG terminal and other gas holdings. The company has agreed to buy all of the output, up to 300 million cubic feet per day, from the Deep Panuke offshore gas project off Nova Scotia.

Canaport's operating at less than 20% of capacity would appear to support the arguments of opponents of the proposed LNG terminals for Passamaquoddy Bay, who believe that there is plenty of capacity for LNG imports and no need for more terminals in North America. Many industry journals and experts are reporting that natural gas reserves in the U.S. and Canada are sufficient to meet the demand for more than 100 years and that the U.S. LNG import terminal sector is overbuilt.

According to Mary Usovicz, director of external affairs for Repsol, 32 ships have delivered LNG at Canaport since the facility opened, for an average of two ships a month. She comments, "Repsol will use the terminal to the extent necessary to meet the markets' needs. For instance, during last winter, Repsol was discharging nearly 800 mmcfd to meet the market needs. Other times, the market did not need as much and so output was reduced. With Canaport LNG, Repsol provides a great deal of valuable flexibility to the marketplace."

Repsol has leased for a 25-year period 100% of the capacity at Canaport LNG. The new multiyear LNG supply agreement with Qatargas further enhances Repsol's ability to provide more secure supplies of natural gas to eastern Canada and the northeast U.S. markets. Previous to the agreement with Qatargas, the Canaport terminal has been importing LNG from Trinidad and Tobago.

"Repsol has become a major player in the eastern Canada and northeast USA natural gas markets. Currently, natural gas supplies 75% of the electric generation market in northeast USA and continues to increase its share in the home heating market. Repsol has the ability to supply over 1 bcf per day of natural gas into the northeast USA and eastern Canada markets via the Canaport LNG facility." said Phil Ribbeck, president of Repsol Energy North America Corporation.

Repsol is a fully integrated oil and gas company, operating in over 30 countries. It is one of the 10 largest private oil companies in the world and one of the world's largest LNG players. Repsol is the managing general partner in Canaport LNG Limited Partnership, the entity that owns and operates Canaport LNG.

Qatargas pioneered the liquefied natural gas (LNG) industry in Qatar. Today, the company is exporting 26 million tons of LNG annually from the five LNG trains.


© 2010 The Quoddy Tides
Eastport, Maine
Article republished on Save Passamaquoddy Bay website with permission.