Repsol Scraps Bid to Ship Canadian Gas to Europe Over Rising Costs

A view shows the headquarters of Spanish oil major Repsol in Madrid, Spain, February 25, 2016. REUTERS/Juan Medina/File Photo

Spanish energy firm Repsol SA has abandoned the idea of expanding a liquefied natural gas terminal on Canada’s east coast, saying the cost of shipping gas there is too high.

Repsol conducted a feasibility study on extending its facility near Saint John, New Brunswick, to allow it to export gas to Europe. It’s currently an import terminal that brings in fuel for markets in eastern North America, with enough capacity to heat 5 million homes.

But the company has deemed it too expensive to ship natural gas from fields in western Canada across the continent to port. The project would also have required new liquefaction facilities and upgrading an already-busy pipeline network with partner TC Energy Corp.

“Following a study carried out by the company, it was determined to not continue with the Saint John liquefaction project as the tolls associated to it made it uneconomical,” Michael Blackier, a spokesperson for Saint John LNG, the Repsol-owned entity that operates the terminal, said by email Thursday.

The idea of building an export terminal on Canada’s Atlantic coast has been around for decades, but it was given new urgency last year after Russia invaded Ukraine and sent energy prices soaring across Europe.

Germany was under particular strain, with Chancellor Olaf Scholz needing to find new sources of energy to replace Russian supply. He pressed Prime Minister Justin Trudeau to look at all options, including at a Group of Seven summit in the Bavarian Alps in June and on a visit to Canada in August.

Jonathan Wilkinson, Canada’s natural resources minister, convened a meeting earlier this week with Repsol and TC Energy to determine whether the project still had a chance, according to people familiar with the matter. Repsol informed the group it wasn’t viable, the people said.

While there are numerous other eastern terminal proposals, the Repsol project was seen as having the most potential because it was an expansion of an existing facility that wouldn’t require going through the extensive regulatory process of building from scratch.

Wilkinson backed the idea, at one point telling Bloomberg the terminal could be shipping gas to Europe within three years. Trudeau also said his government would help expedite the project through the regulatory process — but only if the companies involved decided there was a business case to build it.

Ian Cameron, Wilkinson’s spokesperson, said Canada is still focused on global energy security and pointed to the recent approval of an export terminal on the west coast known as Cedar LNG.

“It is up to individual proponents to ensure the economic viability of their proposed projects,” Cameron said by email. “In the case of Saint John LNG, the project proponent has informed us that their evaluation concludes there is no business case, as the cost of transporting gas across the significant distances are too high.”

A spokesperson for TC Energy referred questions to Repsol.



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