Yesterday, a joint venture between the U.S. and Canada made a “very significant” step forward in setting up a new LNG export facility in Cape Brenton, Canada.
The facility is owned by Bear Head LNG Corp., which is owned by Perth, Australia-based Liquefied Natural Gas Ltd. It has been approved to export up to 440 billion cubic feet of U.S. natural gas into Canada, then to chill it into liquid form and export it overseas.
Bear Head expects to make its final investments into the asset by 2016, and the export terminal could be up and running by 2019.
However, there are a few more regulations that need approval before this can move forward…
First, both countries need to agree on export terms. The U.S. has already given its approval, but the National Energy Board of Canada has not.
Next, a route must be decided upon. Due to several inter-connected pipelines, some of the project’s supporters are pushing for not only exports from the U.S. into Canada, but imports from Canada into the U.S. and back again.
Finally, once all U.S.-Canada agreements have been made, Bear Head will need special permissions to export the LNG product to countries who may not have free trade agreements with the U.S.
The current deal only includes those countries that are included in the free trade agreements; there are more opportunities for profit with non-free trade countries whose natural gas prices are higher than that of North America’s.
The project director John Godbold insists that “the project financing and the financiers related to the project really necessitate having all three in place.”
As we mentioned previously, the LNG market is also glutted. Canada and the U.S. will have to move forward quickly to approve these parts of the project to start exports soon and stay cost-efficient in the future.
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