Spanish company drops LNG terminal in New Brunswick citing high shipping costs

FREDERICTON — The Spanish company behind a proposal to export liquefied natural gas to Europe through a terminal in Saint John, N.B., has announced it will not go ahead with the project because the costs are too high.

New Brunswick Premier Blaine Higgs said Friday he was disappointed by Repsol's decision to drop the project but not completely surprised because he was aware of issues surrounding costs.

"I was anticipating something that would be probably unattractive economically, but obviously disappointed in the project," he told reporters. "At this point (they're) certainly not able to proceed because of high costs of gas supply."

The owner of the Saint John plant had meetings with the federal government in June on turning it into an export facility to help Europe wean itself off Russian oil and gas after the invasion of Ukraine. The plant currently imports liquefied natural gas from the United States, but plans were to retrofit it so it could export gas in about three years.

German Chancellor Olaf Scholz said last year his country was open to accepting more gas from Canada but cautioned that the economics might not make sense.

"There are a number of potential projects, including one in Saint John, and some others that are on the books for which there has never been a strong business case because of the distance from the gas fields,'' Scholz said at the time.

Higgs said Repsol made it clear that the economics of transporting the gas by pipeline from Western Canada before shipping it to Europe "were just completely out of the question."

"The components on the construction, the components on the marketability and the buyer met the criteria," he said.

"But the gas supply component, which Repsol made very clear in their statement, did not meet the criteria, and basically made the economics not work." The tolls to ship the gas by pipeline were "just too high" and made the project unviable, he added. Higgs said the "actual numbers" were not shared with him.

Michael Blackier, spokesman for Repsol's Saint John plant, said the decision to scrap the liquefaction project was made following a feasibility study that found the overall costs to ship the gas to their terminal were too high.

"We won’t be providing any documentation," he said in an email when asked for a copy of the feasibility study.

This report by The Canadian Press was first published March 17, 2023.