LNG project proposes to use offshore natural gas

Maiwpukek First Nation, first Indigenous group with equity stake in N.L. offshore energy sector

If things go according to plan, liquefied natural gas from Newfoundland's offshore oil fields will be heating up homes in Europe by the start of the next decade.

Leo Power, CEO of LNGNL, says the project will involve three main components. The first step is to put a production platform in the middle of the existing oil fields to tap into the natural gas that is a by-product of oil production. A 600-kilometre long underwater pipeline, encased in concrete, would be built to flow the natural gas from the offshore to the on-shore processing facility. An onshore facility would be built at Grassy Point, Placentia Bay, where the gas would be liquefied.

Speaking at the Newfoundland & Labrador Oil & Gas Industries Association in

St. John's this week, Power said his company wants to locate their facility in Placentia Bay for several reasons.

It is one of the largest, deepest, bays in the world. It has pilotage support, thanks to the fact there's already tanker traffic in the bay accessing the refinery at Come By Chance refinery and the Whiffen Head oil transshipment terminal, and a marine traffic communications centre.

Grassy Point has enough land, (13 hectares), to develop a LNG terminal and the company expects there would be no obstacles to getting government permission for the site, said Power, who pointed out the site was previously approved by the province as the location for the transshipment terminal.

PARTNERSHIP

The LNG project involves several business partners, including the Maiwpukek First Nation (MFN) of Conne River.

The official signing ceremony of a project framework agreement took place at the NOIA Conference. It is the first ever First Nations equity participation in an offshore energy project in Newfoundland and Labrador.

The First Nations Major Projects Coalition (FNMPC), a non-profit coalition that works to help First Nations gain ownership in the major projects taking place in their territories, has been working with the MFN since July to provide technical advice and support.

The MFN'S equity stake in the project is through its company, Miawupek Horizon Maritime Services Ltd.

“Producing some of the world's cleanest LNG aligns well with the values of our First Nation. Furthermore, the benefits by way of own source revenue generation and the jobs this project will create for our community members is significant and a big part of our plan for self-sufficiency," MFN Chief Misel Joe, said in a news release,

Other partners in the LNG project include Baine Johnston Corp., Pennecon Ltd. and Mcdermot International.

NEXT STEPS

The plan to extract the natural gas from the Jean D'arc Basin will involve many more steps, including environmental assessment and the blessing of provincial and federal regulators.

Power said there is an estimated 8 trillion cubic feet of natural gas in the Jean D'arc Basic, the by-product of the Hibernia, White Rose, Terra Nova and White Rose Extension oil fields.

LNG-NL estimates it can recover at least 5 trillion cubic feet of that gas over 25 years. In terms of value, said Power, that would be the equivalent to 150 million barrels of crude oil.

“Now is the time to develop Newfoundland and Labrador's vast reserves of offshore natural gas,” said Power, noting, “The trend towards de-carbonization is bullish for natural gas, and for exports of LNG.”

LNG has half the carbon intensity of coal, he said.

“There is major coal-to-gas switching going on in the world, especially in places like China and India," he said.

“Shell, BP (British Petroleum) and others are projecting the demand for LNG to double by 2040,” Power said.

The Newfoundland company wants to be part of that potential but a major challenge will be financing.

The proposed LNG-NL project will cost about $10 billion.

“We don't have the money yet to execute this project, but we want to tell the world ... that we have very economic deposits of natural gas to liquify for export,” Power said.

The company will continue to work with other companies, including offshore oil producers, to further explore the economics of the plan, he said. “We hope to have a final investment decision in three to four years, and first production by 2030.”