Repsol SA is accelerating efforts to build a natural gas export terminal on Canada's East Coast, as the company awaits shareholder and regulatory approval of its $8.3-billion (U.S.) takeover deal for Talisman Energy Inc.
In new filings with the National Energy Board, the Spanish energy firm said it plans to export as much as five million tonnes of super-chilled gas per year for 25 years from an existing site at Saint John.
The move shows the Madrid-based company expects few hurdles as Talisman shareholders prepare to vote on its $8-per-share offer next week.
Repsol is proposing to build an export facility at the site of its existing Canaport LNG plant, which it owns jointly with Irving Oil Ltd.
The export plant would make use of gas from the U.S. northeast as well as from deposits in Western Canada, for a total of 785 million cubic feet a day, according to the filings. Repsol is also seeking permission to import U.S. gas.
Repsol said it has held discussions with companies in both regions that are keen to supply the plant. The project would hinge, in part, on reversing the flow of the Maritimes & Northeast Pipeline, which currently moves gas south to New England from Atlantic Canada.
The project could also tap Talisman's assets in the sprawling Marcellus shale. In the fourth quarter, Talisman said it produced an average 472 million cubic feet per day from the region, which lies under New York and Pennsylvania. In all, Talisman controls about 78,000 hectares of land in the zone, as well as pipeline and processing assets.
Repsol did not disclose a capital cost for the export scheme, which it aims to start up by 2020.
The plans are unfolding as rival LNG export plants on the British Columbia coast encounter setbacks as a result of regulatory delays, high costs and weak energy prices.
Among the larger players, Malaysia's Petronas has put off making a final investment decision, jeopardizing $36-billion (Canadian) in planned investments.
Repsol's strategy for an export terminal at Saint John mirrors plans by U.S. developers to repurpose existing infrastructure in a bid to keep costs for the mega-projets in check.
Canaport started importing LNG in 2009. However, the facility suffered amid the explosion in U.S. shale output, prompting Repsol to take a $1.3-billion (U.S.) write down on its 75-per-cent interest in the plant in 2013. In the same month, it was passed over as Royal Dutch Shell PLC bought Repsol's worldwide LNG assets for $4.4-billion.
With files from Carrie Tait