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The Canaport LNG terminal in Saint John, N.B.Roger Hallett/The Globe and Mail

Spain's Repsol SA and its junior partner Irving Oil Ltd. found themselves caught on the wrong side of the rapid transformation in the North American energy market from import-dependent to export-oriented.

Located at the tip of Saint John's Mispec Point in the Bay of Fundy, Canaport LNG began importing liquefied natural gas in 2009 just as the continent's shale gas production was exploding and plans for several LNG import facilities across North America were being shelved.

A visit to the area this week found the plant's jetty empty; the only sign of activity around the wharf and storage tanks was the flare stack, lit up as a warning beacon against the cloudy sky.

Located next to the site for the crude export terminal planned by TransCanada Corp. and Irving Oil Ltd., Canaport LNG serves as a stark reminder that megaproject economics can quickly sour in the face of dramatic shifts in the oil and gas markets.

The facility now operates at a small fraction of its name-plated 1.2-billion-cubic-feet-a-day capacity, with only the occasional ship docking at the site, although there are a few more in winter when the plant can send gas by pipeline to New England.

But future U.S. sales are threatened as pipelines companies rush to connect the northeast region with the prolific and low-cost Marcellus shale gas field that is producing in Pennsylvania, West Virginia and Ohio.

In February, Repsol took a $1.3-billion writedown on its 75-per-cent interest in the LNG facility, after the company failed to include it in a sale of other LNG assets in Trinidad and Peru to Royal Dutch Shell PLC for $4.4-billion.

Canaport LNG has since applied to the National Energy Board for permissions to re-export gas that it imports and stores in tanks, in order to take advantage of spot-market spikes.

Over the longer term, the company may follow the lead of some U.S.-based import terminals and invest in liquefaction capacity to become a pure exporting operating. But it needs a gas supply, and New Brunswick's fledgling shale gas industry has yet to prove up sufficient reserves to underpin such an operation.

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