Latest News and HighlightsHigh media interest in Pieridae's purchase of Shell's Alberta Foothills assets

2019/07/04

Media Coverage – Pieridae Acquires Shell Assets

East Coast LNG developer nearing deal to buy gas assets, sources say

Globe & Mail JEFFREY JONES MERGERS AND ACQUISITIONS REPORTER

CALGARY PUBLISHED JUNE 25, 2019

A Calgary-based company seeking to build a $10-billion liquefied natural gas plant in Nova Scotia is close to a deal to buy natural gas assets to help fill the first phase of its project, according to people familiar with the situation.

Pieridae Energy Ltd., led by Canadian LNG investor Alfred Sorensen, has said it requires more production to anchor the massive export-focused development before making a final investment decision.

Pieridae’s shares were halted on the TSX Venture exchange on Tuesday pending a news release from the company. An announcement on a deal could be announced as early as Wednesday, said the people, who spoke on condition of anonymity because they were not authorized to speak publicly.

The seller of the assets and size of deal were not immediately known.

Pieridae spokesman James Millar declined to comment, other than to say the shares were halted for a material announcement.

In May, Mr. Sorensen said the company was discussing financing options for the development and was in the market for additional Alberta gas supplies.

Such a deal would follow Pieridae’s $94-million acquisition of Alberta gas producer Ikkuma Resources Corp. last year. The company has previously acquired gas assets in Quebec as well.

Pieridae is nearing a decision on proceeding with its Goldboro LNG project, located northeast of Halifax. If it proceeds, it would follow the $18-billion LNG Canada development at Kitimat, B.C., led by Royal Dutch Shell. Shell and its partners gave the green light to the project late last year.

As it seeks supply to fill the plant, Pieridae can take advantage of an Alberta gas industry that has faced severe financial pressure due to weak prices and competition in the United States, where Canadian exports have fallen in the past decade. The Sable offshore gas project off Nova Scotia is being decommissioned, prompting Pieridae to seek supply from Alberta.

The company has said it aims to use TC Energy and Enbridge Inc.-owned pipelines to get Alberta gas to the plant. It has the necessary permits and has signed a long-term sales agreement with Uniper, a German utility.

ALFRED SORENSEN FINDS GOLDBORO LNG BELIEVERS

Geoff Bird ALLNovaScotia.com June 27-19

The Goldboro LNG developer has struck a $190-million cash-and-stock deal for Shell Energy Canada's midstream and upstream assets in the southern Alberta foothills.~

The deal for Pieridae Energy Inc. is nearly as much about securing supply for its proposed $6-billion export terminal on the Eastern Shore as it is a show of strength to Bay Street, demonstrating it can summon the financial muscle to overcome the inertia of Alberta's flagging energy industry.

Central to the transaction is $150 million worth of debt, coming from an undisclosed lender in the United States, to cover most of the $175-million cash component of the deal. Shell is also taking $15 million worth of shares in Pieridae.

"It's been a very long battle to find the cash to pay for it," Pieridae CEO Alfred Sorensen told allNovaScotia after his company announced the deal with Shell on Wednesday.

"It hopefully silences the critics and allows us to get this LNG project to final investment decision."

Pieridae is getting from Shell production of 28,600 barrels of oil equivalent a day, as well as proved and probable reserves of 119.96 million barrels of oil equivalent.

The deal includes three gas plants, as well as Shell's staff and office space in downtown Calgary. The acquisition is expected to close in the third quarter.

It more than doubles Pieridae's current reserves and production, assets it picked up last year in its $94-million all-stock merger with Alberta gas producer Ikkuman Resources Inc..

The Shell deal also gives Pieridae a more substantial flow of money to stay afloat over the coming years. Pieridae says its annual net operating income will increase to between $55 and $75 million annually, up from less than $10 million currently.

Sorensen says it shores up most of the gas Pieridae needs for Goldboro's first production plant, called a train.

Kellogg Brown & Root Ltd. is completing cost estimates for the project, one of the last missing pieces before Sorensen and his team can make a final investment decision on Goldboro LNG.

That decision could come by the end of the year, he said.

Pieridae plans to ship gas to Goldboro through TC Energy Corp.'s Mainline pipeline to its proposed plant at the end of the Maritimes and Northeast Pipeline.

A transportation deal with the pipeline owners is another issue yet to be hashed out.

German energy giant Uniper SE has a contract for the first train's entire production of 750 million cubic feet a day over 20 years.

In October, Germany agreed to increase Pieridae's loan guarantee by US$1.5 billion to help the company acquire natural gas. The loan guarantees are part of a longstanding German program that helps the government secure raw materials and resources.

Pieridae has had a similar guarantee in place since 2013 for debt financing of up to US$3.1 billion to build Goldboro's first train, and another $1 billion for gas resource acquisitions.

Pieridae shares halted Tuesday at 86 cents (52-week high/low: $4.55/75 cents.

Pieridae to Purchase Shell Canada’s Foothills-Area Production and Assets

Daily Oil Bulletin, June 26, 2019

Pieridae Energy Limited has signed a purchase and sale agreement with Shell Canada Energy to purchase all of Shell’s midstream and upstream assets in the southern Alberta Foothills for C$190 million.

Shell Canada will take an equity stake in Pieridae.

“[This deal] demonstrates solid progress for our flagship Goldboro LNG project,” said Alfred Sorensen, Pieridae’s chief executive officer.

“We said we would acquire additional gas supplies for the LNG facility and we have done that. Not only does this deal help us secure the remaining conventional natural gas supply needed for the first train of the Goldboro LNG project, it makes Pieridae a major player in the Alberta midstream and upstream industry.”

The conventional natural gas assets Pieridae controls are expected to allow the company to access up to US$1.5 billion in credit support from the German government under the UFK program to develop these upstream assets as part of the Goldboro LNG project.

The assets currently produce approximately 28,623 boe/d (based on the Q1 2019 average), consisting of approximately 118.9 mmcf/d of natural gas, 5,646 bbls/d of NGLs, and 3,161 bbls/d of condensate and light oil.

Pieridae will also acquire three deep cut, sour gas processing plants (Jumping Pound, Caroline and Waterton) in the acquisition, with a combined capacity of approximately 750 mmcf/d (currently operating with 420 mmcf/d of spare capacity), a 14 per cent working interest in the Shantz sulphur forming plant, and approximately 1,700 kilometres of pipelines.

The purchase price for the acquisition will be satisfied via (i) the payment to Shell of C$175 million in cash (net of adjustments), to be raised by Pieridae through the issuance of term debt and equity, and (ii) the issuance of Pieridae common shares to Shell having an aggregate value of C$15 million (such value to be determined proximate to the time of closing of the acquisition, in accordance with the terms of the purchase agreement).

Subject to completing due diligence, the acquisition is expected to close in the third quarter, pending satisfaction of customary closing conditions and receipt of regulatory approvals.

“I’m proud of the sour gas businesses we have built in Alberta and I want to thank all of the employees, contractors and local communities that have helped make these assets a cornerstone of our business in Canada for nearly 70 years,” said Michael Crothers, Shell Canada president and Country Chair. “We are pleased they are going to a buyer with a strong focus on safety, community and environmental stewardship, and one that is well placed to take these assets to the next stage of their development.”

Pieridae will retain all site-based Shell employees and some Calgary-based Shell employees who predominantly support the Foothills assets, Shell said.

Last October, Shell Canada Energy, an affiliate of Royal Dutch Shell plc, announced it has taken a final investment decision (FID) on LNG Canada, a LNG project in Kitimat, B.C., in which Shell has a 40 per cent working interest.

Pieridae Energy to buy Shell’s southern Alberta assets for $190-million as part of plan to build LNG plant in Nova Scotia

Globe & Mail Jeffrey Jones Mergers and Acquisitions Reporter June 26, 2019 1700 EDT

Pieridae Energy Ltd. is buying Royal Dutch Shell PLC’s southern Alberta foothills assets for $190-million, boosting output that would flow to its planned liquefied natural gas plant in Nova Scotia.

Under the deal, Pieridae will pay $175-million in cash and issue $15-million in shares to Shell. It will fund the cash portion by issuing debt and equity, it said.

The announcement confirmed an earlier report by The Globe and Mail.

Pieridae has said the acquisition of Alberta gas production is a key step as it prepares to make a final investment decision for its $10-billion Goldboro LNG plant, to be located northeast of Halifax.

With the acquisition, Pieridae will get production of 28,600 barrels of oil equivalent a day as well as the Caroline, Jumping Pound and Waterton gas plants in southern Alberta.

Pieridae to buy Shell Canada gas assets for C$190 million

Nia Williams Reuters June 26-19

CALGARY, Alberta (Reuters) - Canada’s Pieridae Energy will buy gas assets in Alberta from Royal Dutch Shell for C$190 million ($144.77 million), Pieridae said on Wednesday, securing supply for its planned liquefied natural gas plant in eastern Canada.

The deal will consist of all of Shell’s midstream and upstream assets in the southern Alberta Foothills area, which produce 29,000 barrels of natural gas, natural gas liquids and condensate. Pieridae is also buying three sour gas plants.

It will enable Pieridae to secure the remaining supply needed for the first phase of its proposed Goldboro LNG plant in Nova Scotia. If it goes ahead Goldboro will be Canada’s first east coast LNG project, producing 10 million tonnes per year.

 “Not only does this deal help us secure the remaining conventional natural gas supply needed for the first train of the Goldboro LNG project, it makes Pieridae a major player in the Alberta midstream and upstream industry,” said Pieridae Chief Executive Alfred Sorensen.

Shell and its partners are building Canada’s first LNG export terminal in northern British Columbia, but the company has scaled back operations elsewhere in the country, including in Alberta’s oil sands.

Pieridae Energy buying Shell Alberta natural gas assets to feed LNG plant

The Canadian Press JUNE 26, 2019 02:52 PM

CALGARY — A company planning to build an LNG export facility in Nova Scotia says it is buying southern Alberta natural gas assets from the Canadian arm of British-Dutch giant Royal Dutch Shell.

Pieridae Energy Ltd. says it has agreed to pay $190 million, with $175 million in cash and the rest in common shares.

Pieridae Energy plans to bring bounty of Alberta gas fields to Guysborough County for export

Halifax Chronicle-Herald Aaron Beswick (abeswick@herald.ca) June 27 at 8:15 p.m. 

With Pieridae Energy’s stock price down to 86 cents, deep in debt and a $50-million term loan coming due this fall, online discussion forums exploded with theories about the future of the mega project after trading of Pieridae shares was halted on Tuesday.

Pieridae’s proposed $10-billion liquefied natural gas terminal promises to not just reverse the fortunes of Guysborough County but also get trapped Albertan natural gas to energy-hungry Europe.

Then on Wednesday evening the company issued a statement laying out a series of financial maneuverings that will, if all goes well, end with it owning natural gas fields in the Alberta foothills producing gas equivalent to 28,623 barrels of oil per day.

And Pieridae, which, according to its own financial statements, lost $13 million in the first quarter of 2019 and had only $14 million left in reserves, would buy those fields from Shell Canada for $190 million.

“This has been in the works for a long time,” James Millar, Pieridae’s director of external affairs, told The Chronicle Herald on Thursday.

That Shell wanted to sell the conventional (non-fracked) sour gas wells and associated plants was no surprise — it had been reported in local Alberta media as early as January.

Shell Canada is leading the $40-billion proposed LNG Canada export terminal for Kitimat, B.C. and is focusing its effort on getting at lower-cost fracked gas as a supply in the northeast corner of that province.

The southern Albertan foothills gas fields, being purchased by Pieridae, sell relatively expensive to produce sour gas into a market of depressed prices. The spot price for Albertan gas on Thursday was 85 cents a gigajoule, versus $2.26 on the Henry Hub (benchmark price in the United States).

In comes Pieridae Energy with its $1.5-billion loan guarantee from the German government to develop natural gas fields, tied to a caveat that the fields must be non-fracked.

The fields also have to be close to the TransCanada Pipelines system Pieridae proposes to use to get gas to Goldboro for export to Europe — where the spot import price was US$4.34 a gigajoule on Thursday, down from $9.52 a gigajoule last September.

“This seems to be to keep them going but fundamentally I don’t think western Canadian gas from the foothills is the final answer,” said Ed Kallio, a Calgary-based energy analyst with Eau Claire Energy.

“It’s an intermediate answer to keep them in compliance with their anchor customer (German utility Uniper).”

The purchase gives Pieridae ownership of all the gas needs to supply the requirements of Uniper, which has a 20-year contract to take half the capacity of its proposed export terminal.

The Shell assets it is acquiring are also Pieridae’s first money makers. According to Pieridae, the gas fields generate a net profit of $60 million a year, based on figures from the first quarter of 2019.

Until now, Pieridae has been funding the development of its proposed export terminal with borrowed money, purchasing natural gas holding companies through share swaps, and issuing blocks of shares that it sold to investors at ever decreasing prices.

Last December Pieridae raised $8 million by selling shares for $3.40 a piece. Then on Feb. 28 it announced it had issued 8.9 million shares in a private placement at a price of $2 a share to raise about $18.9 million.

In this latest deal, which hasn’t gone through yet, Pieridae has a plan in place to raise about $41 million by selling 47.5 million shares at 86 cents each.

It also has borrowed $153 million privately, at an interest rate of 13.3 per cent, that will come due in five years.

All this moving of money will allow Pieridae to pay back the $50 million loan coming due from from The Alberta Investment Management Corp. (which is also buying $10 million worth of shares). It also provides the $175 million it will pay Shell Canada in cash for its natural gas assets. Shell will get the remaining $15 million it is owed in the form of Pieridae shares.

“We will have positive cash flow from a proven resource from a multinational (Shell) who by the way is now an investor in the company,” said Millar.

“The lights are fully on and there’s lots of power to the house.”

First, though, the deal has to go through. Pieridae must complete its due diligence on the assets. Then there’s the question of what’s next?

A final investment decision has been repeatedly promised over recent years on whether the company will actually turn Goldboro and northeastern Nova Scotia into a major energy export hub.

According to Millar, that’s waiting on a lump-sum cost to design, engineer and build the facility from Houston-based contractor KBR Inc. And that won’t be coming until next year.

“We need to flow gas in late 2023 or into 2024 so we need to get shovels in the ground next year,” said Millar.

“You reach a point that you have to honour your commitments to the Germans.”

Energy analyst Kallio, meanwhile, isn’t holding his breath.

He said that while he’d like to see the project happen, sending gas by pipeline from Alberta to Nova Scotia to then cool it down and put on a ship to Europe, is a long trip with a lot of costs.

Ultimately the feasibility of the entire project is based not on where European natural gas prices are today, but where they will be five years out.

“The real prize would be Nova Scotia gas or access to Marcellus gas (from the United States),” said Kallio.

“If the gas were coming from Nova Scotia or New Brunswick, and in line on a cost basis with other unconventional supply, it would be a boon to the plant.”

The key word there, however, is “unconventional.” To the rest of us that means fracked.

And though Nova Scotia currently imports fracked natural gas from the United States via the Maritimes and Northeast Pipeline, the practice is banned here.

According to the Onshore Petroleum Atlas prepared by the Department of Energy, Cumberland and Hants counties sit on an estimated $20 billion to $60 billion worth of natural gas locked in shale rock formations that could only be accessed through the controversial fracking process.

Premier Stephen McNeil has said his government would only be interested in lifting the ban in an area if there were community support for the move.

Quietly, Cumberland County has been having that discussion.

Over recent months Cumberland County council has put aside time at its meetings to study the topic. In May the Cumberland Energy Authority held a symposium on the topic in Springhill. And a debate was held on it last year by the Six Rivers Chamber of Commerce in Pugwash.

Meanwhile, earlier this month New Brunswick Premier Blaine Higgs confirmed his Progressive Conservative government had lifted a portion of its province-wide ban on fracking to allow for it in the Sussex area where Halifax-based junior oil and gas company Corridor Resources has been operating.

What the market thinks of Pieridae’s latest manoeuvre won’t be seen until the trading halt is lifted sometime next week.

Two LNG projects inch closer to final investment decision after key deals

Woodfibre, Pieridae deals 'the next logical step for the Canadian industry, as it slowly challenges major gas rivals Australia and Russia'

 Financial Post Nicholas Sokic June 28, 2019 6:15 AM EDT

Two liquefied natural gas proponents on either side of Canada’s coastlines are inching toward final investment decisions for their projects after securing key deals.

On Thursday, Woodfibre LNG Export Pte Ltd. said it signed its first major deal to sell LNG to the trading unit of BP Plc. The energy giant will buy 0.75 million tonnes per annum of LNG over 15 years from the project based in Squamish, B.C., with first delivery expected in 2023.

The $1.6 billion project, being developed by Hong Kong-based Pacific Oil & Gas Ltd., has reportedly targetted a final investment decision this summer.

“Woodfibre LNG is a tremendous opportunity for British Columbia and Canada to get clean natural gas to growing markets in Asia,” said David Keane, president of Woodfibre LNG.

A day earlier, Pieridae Energy said it’s acquiring Shell Canada’s Alberta gas assets for $190 million. The Calgary-based company, which has been accumulating natural gas assets, has now secured the remaining conventional natural gas supply needed for its 10 million tonnes per year Goldsboro plant in Nova Scotia.

Its plan is to export to Europe — mainly Germany, where it has a contract in place with the Düsseldorf-based gas utility Uniper SE.

Alfred Sorenson, chief executive officer of Pieridae, said the next steps for the company were to get a fixed price for the lump sum contract, which is “well on its way,” and to finalize long-term financing.

“… So depending on the timing it’ll either be the very end of this year or the very beginning of 2020 that we’ll be ready for a final investment decision,” Sorenson told the Financial Post.

The Shell assets will allow Pieridae to access up to US$1.5 billion in credit support from the German government under the Untied Loan Guarantees program to develop the upstream assets as part of the Goldboro LNG Project.

Ian Archer, the associate director of North American natural gas at IHS Markit, sees several reasons for the Germans to team up with Pieridae.

“It helps the Germans get off of Russian gas, which is what they’re interested in doing. But one of the stipulations is that it has to be non-frack gas, which is one of the reasons they bought this Shell gas.”

A Nova Scotia base of operations also means a delivery time of six days to markets in Germany, the U.K. and the Netherlands, faster than the U.S. or Russia can offer.

At the other end of the country, Woodfibre has a licence to export 2.1 million tonnes of LNG for 40 years, primarily to the Asian market, which is expected to account for 75 per cent of global demand.

Archer envisions these developments as the next logical step for the Canadian industry, as it slowly challenges major gas rivals Australia and Russia.

Royal Dutch Shell and its Asian partners are also building the $40 billion LNG Canada Ltd. project that’s expected to put Canada firmly on the LNG map, but the progress of smaller projects suggests the industry is revving up and connecting to markets beyond the U.S.

“North American gas industries are very saturated. We see an oversupply continuing and it’s going to remain a low-price environment for quite some time,” said Archer. “So if Canada wants to grow the gas business, the next logical step would be connecting to global markets — and both projects continue to advance that.”

Sorenson sees these developments as a natural way to evolve from an outdated relationship with the United States.

“The natural gas industry in Canada in the last 20 years relied on U.S. as a free option to put gas into the marketplace,” said Sorenson. “Now that the Americans don’t need our gas anymore, if we want to continue to have a natural gas industry that’s bigger than just supplying to Alberta, we have to look farther afield.”

At the same time, Archer says these developments are unlikely to lift depressed natural gas prices in Alberta, as the projects won’t be online until the mid-2020s.

“By that time, the situation in Alberta may have improved anyway because of the improved connectivity within the NGTL system (TC Energy’s Nova Gas Transmission Ltd.),” said Archer. “If all these projects go ahead, it wouldn’t surprise me to see a bit of price uplift.”

The two projects are gearing up amid a predicted LNG shortage in the mid-2020s. IHS Markit predicts a four per cent growth in annual global gas demand.

For Archer, Woodfibre’s is the more positive development, as Pieridae may have to deal with regulatory issues when it comes to delivery. Woodfibre is building much closer to their supply sources and their biggest challenge was primarily acquiring customers, which they have partially resolved through a deal with BP Plc.

“The infrastructure is there but there could be issues in Quebec because I believe they need to expand the pipeline in Quebec,” said Archer. “That would involve a regulatory hearing and may involve some opposition.”

For his part, Sorenson does not see this as a major issue.

“The natural gas is going from Western Canada to Eastern Canada via TransCanada (now TC Energy) and once liquefied it goes on a boat to Germany,” said Sorenson. “There is some work that needs to be done on the eastern end of the pipeline but TransCanada is very confident they can get it done and in time for the in-service date of 2024.”

Email: nsokic@postmedia.com

Pieridae Energy buying Shell’s Alberta assets to feed Goldboro LNG project

LNG World News June 28, 2019

Pieridae Energy has signed a purchase and sale agreement with Shell’s Canadian entity to purchase all of Shell’s midstream and upstream assets in the southern Alberta Foothills.

Pieridae said on Wednesday that the purchase price was CAD$190 million ($145 million), subject to normal adjustments.

The purchase price will be satisfied via a cash payment to Shell raised by Pieridae through the issuance of term debt and equity and the issuance of the company’s common shares to Shell.

Closing of the acquisition is expected to occur in the third quarter of 2019, pending satisfaction of customary closing conditions and receipt of regulatory approvals.

Pieridae’s CEO Alfred Sorensen said: “[This] also demonstrates solid progress for our flagship Goldboro LNG project.

“We said we would acquire additional gas supplies for the LNG facility and we have done that. Not only does this deal help us secure the remaining conventional natural gas supply needed for the first train of the Goldboro LNG project, it makes Pieridae a major player in the Alberta midstream and upstream industry.”

Shell’s assets in the deal currently produce approximately 28,623 boe/d, consisting of approximately 118.9 mmcf/d) of natural gas, 5,646 bbl/d of NGLs, and 3,161 bbl/d of condensate and light oil.

Pieridae will also acquire Jumping Pound, Caroline, and Waterton deep cut, sour gas processing plants in the acquisition, with a combined capacity of approximately 750 mmcf/d (currently operating with 420 MMcf/d of spare capacity), a 14 percent working interest in the Shantz sulfur forming plant, and approximately 1,700 kilometers of pipelines.

The associated liquids will provide accretive NOI, and the associated gas will provide a large contribution to the 800 MMcf/d of conventional gas supply that is required for train 1 of the Goldboro LNG facility.

The three large gas processing plants included in the acquisition feed into the TC Energy Pipeline System and are located south of the normally congested James River transport corridor. This is anticipated to result in lower transportation tolls to AECO and fewer outages.

Something B.C.'s Horgan and Alberta's Kenney can agree on — LNG

Chris Varcoe, Calgary Herald Updated: July 2, 2019

Sitting at the same table, Premiers John Horgan and Jason Kenney remained deeply divided this week over the Trans Mountain oil pipeline, but still found common cause on another front.

Liquefied natural gas.

Two proposed LNG projects made progress this week, sparking hope another facility will soon be under construction after the $40-billion LNG Canada development at Kitimat, B.C., was approved last fall.

The two leaders chatted about the “great opportunities of liquefied natural gas,” Kenney said at the end of the Western Canadian premiers’ meeting in Edmonton.

“We would love to see a second major LNG project of a similar scale and we will do everything we can to facilitate that, and I believe Premier Horgan stands ready to support that,” Alberta’s premier told reporters.

“That’s an area where we have found common ground that would be beneficial to both provinces.”

The two premiers, along with Western Canada’s natural gas industry, may soon get their wish.

Two separate proposals to export super-chilled Canadian natural gas advanced closer toward a final investment decision (FID) on building liquefaction terminals.

On the west coast, Woodfibre LNG inked an off-take agreement with a subsidiary of super-major BP Plc for the delivery of LNG from the project, located southwest of Squamish.

If the $1.6-billion project is built, Woodfibre will provide 0.75 million tonnes annually of LNG — about a third of its total output — over 15 years to BP.

Meanwhile, Calgary-based Pieridae Energy announced it will spend $190 million to acquire natural gas production and three gas plants in Alberta from Shell Canada.

The gas will feed Pieridae’s proposed Goldboro LNG facility to be built in Nova Scotia.

By acquiring almost 29,000 barrels of oil equivalent (BOE) per day from Shell, Pieridae now has enough gas resource — along with production from a previous deal — to supply its facility.

Taken together, the announcements have significantly improved the prospects of more than one LNG project being built in Canada, said Ian Archer, associate director of North American natural gas for IHS Markit.

“Right now, there seems to be a fire lit underneath Canadian LNG, to get projects a (final investment decision) and be the next wave of LNG development globally,” he said Thursday.

LNG is critical for the future success of Canada’s natural gas industry. The country has huge resources but is losing market share in the United States to American producers.

The Montney formation, on both sides of the Alberta and British Columbia border, contains an estimated 449 trillion cubic feet of marketable gas, making it one of the largest-known natural gas resources in the world, according to the National Energy Board.

And demand for natural gas is growing.

According to the International Energy Agency, the global LNG market will expand by 26 per cent by 2024. After falling for several years, LNG investment rebounded last year, however, more facilities will be needed in the future, it said.

These factors should open the door to Canada.

“We’re all watching with anticipation because it’s really important if we can get a second project … it shows clearly this is not a one-project jurisdiction,” said Bryan Cox, head of the B.C. LNG Alliance.

However, such projects take years to build, require global customers, cost billions of dollars to complete and require broad community support.

Only one development — the LNG Canada initiative, led by Royal Dutch Shell — has moved into the construction phase, despite 24 separate proposals being on the drawing board at one point.

Woodfibre officials say they’re hoping to make a final investment decision sometime this summer and start construction by year’s end, with production beginning in 2023.

Byng Giraud, Woodfibre LNG vice-president of business development, said the Canadian industry has regained momentum after hitting pause a couple of years ago amid a spate of new projects around the world.

Other projects in Canada are also being considered today.

“I call it the cool-kid scenario. When the first cool kid goes to the party, then suddenly all the cool kids want to go,” he said Friday.

For Pieridae Energy, the company will pay $175 million and issue $15 million in common shares to Shell to acquire the gas assets in Alberta.

Acquisition helps push Pieridae Energy toward FID on Goldboro LNG project

Jim Magill S&P Global Platts – June 28, 2019 2134 UTC

Houston —  Pieridae Energy is nearing a final investment decision on its proposed Goldboro, Nova Scotia, LNG export facility following its acquisition of gas-producing assets and infrastructure in the Alberta Foothills.

The company is expected to announce a positive FID on the project later this year or early next year, Pieridae spokesman James Millar said in an interview Friday. The facility is planned to produce approximately 10 million metric tons of LNG per year from a site on the northeast coast of Nova Scotia. Pieridae estimates the project will be completed in the late 2023-early 2024 time frame.

Millar said the project was given a boost by Pieridae's agreement to acquire Shell's midstream and upstream assets in the southern Alberta Foothills for C$190 million

In that deal, announced Thursday, Pieridae will acquire properties with a current production of approximately 28,623 boe/d, consisting of approximately 118.9 MMcf/d of natural gas, 5,646 b/d of natural gas liquids and 3,161 b/d of condensate and light oil.

Pieridae will also acquire three sour gas processing plants, with a combined capacity of about 750 MMcf/d, a 14% working interest in the Shantz sulfur-forming plant and approximately 1,700 kilometers (1,056 miles) of pipelines.

The acquisition "demonstrates solid progress for our flagship Goldboro LNG project," Pieridae CEO Alfred Sorensen said in a statement.

"Not only does this deal help us secure the remaining conventional natural gas supply needed for the first train of the Goldboro LNG project, it makes Pieridae a major player in the Alberta midstream and upstream industry," he said.

The company said it expects the acquisition will allow Pieridae to access up to US$1.5 billion in credit support from the German government under an agreement to provide the loan guarantee on the condition that Pieridae has sufficient conventional gas assets to supply the project.

The acquisition marks the second time in recent months that the company has bought conventional gas assets in the Alberta foothills. Last September, Pieridae agreed to acquire Western Canadian oil and gas producer Ikkuma Resources.

10 MILLION MT/YEAR CAPACITY PROPOSED

Millar said the Goldboro LNG proposal calls for the construction of a US $10 billion facility, comprising two trains, each with a capacity of 5 million mt/year, requiring about 800 MMcf/d of feedgas.

"For the first train we would supply it with Alberta gas," he said.

For the second train, the developer is looking to tap nearby sources of gas from Atlantic Canada, where Millar pointed to the offshore Sable Island natural gas field as a potential source. Although ExxonMobil recently announced plans to shut down its Sable offshore production project, Millar said the play remains a potential source of gas for export as LNG.

"There's still a lot of gas there and it's literally right across the water from where we'll be building the LNG facility," he said.

There is also the possibility to source onshore supplies of gas from the nearby provinces of Newfoundland and New Brunswick. The latter province is expected to begin producing significant volumes of gas following the lifting of a ban on hydraulic fracturing, Millar said.

Many questions still remain as to the economic feasibility of the Goldboro LNG project exporting gas in the form of LNG from Eastern Canada, which currently imports much of its supply from New England, according to S&P Global Platts Analytics.

Goldboro proposes to use the existing TC Energy Canadian Mainline and Maritimes & Northeast pipelines systems to transport gas from western Canada to Nova Scotia.

On the Canadian Mainline, transportation tolls would add significantly to the landed cost of gas at the facility, with toll rates from AECO to East Hereford reaching upwards of $1.50/MMBtu. The Maritimes & Northeast Canada system has a capacity of 550 MMcf/d, according to its website, which means that if this capacity were configured to deliver solely to the Goldboro facility, it would still require an expansion to meet the roughly 800 MMcf/d needed for each train, according to Platts Analytics.

-- Jim Magill, newsdesk@spglobal.com

-- Eric Brooks, newsdesk@spglobal.com

-- Edited by Brandon Evans, newsdesk@spglobal.com

Pieridae Energy to acquire Shell's assets in southern Alberta Foothills for CA$190mn

William Smith Business Chief June 28, 2019

Calgary based Pieridae Energy has announced it is to purchase Shell’s assets in the southern Alberta Foothills.

The company is to pay CA$190mn (US$144.7mn), with $175mn in cash and $15mn in shares going to Shell. The purchase includes developed and undeveloped land of 257,400 acres.

“This Acquisition will be immediately accretive to the Company and also allows us to enhance the sustainability of our existing asset base,” said Pieridae’s Chief Executive Officer Alfred Sorensen. It also demonstrates solid progress for our flagship Goldboro LNG project. We said we would acquire additional gas supplies for the LNG facility and we have done that. Not only does this deal help us secure the remaining conventional natural gas supply needed for the first train of the Goldboro LNG project, it makes Pieridae a major player in the Alberta midstream and upstream industry. But more than that, it creates a solid, ongoing foundation for the Company as we continue to build toward becoming the first Canadian company to market LNG off the east coast to global consumers.”

With the assets currently producing approximately 28,623 barrels of oil equivalent per day, they are said to align with the company’s existing Central Alberta properties, consolidating Pieridae’s hold on Alberta and British Columbia’s natural gas pools.

The acquisition is expected to close in the third quarter of 2019, subject to the usual closing conditions and regulatory approvals.

Pieridae Energy to buy Shell Canada’s Alberta gas assets for $144.7m

Hydrocarbons Technology June 28, 2019

Canadian oil and gas exploration firm Pieridae Energy has signed an agreement with Royal Dutch Shell to buy the latter’s midstream and upstream assets in Alberta for C$190m ($144.7m).

The accretive acquisition will enable Pieridae to supply additional gas required for the first phase of its proposed Goldboro terminal in Nova Scotia, eastern Canada.

The midstream and upstream assets in the southern Alberta Foothills area currently produces 28,623boe/d, consisting of 118.9MMcf/d natural gas liquids and 3,161bbl/d condensate and light oil

Pieridae chief executive officer Alfred Sorensen said: “This acquisition will be immediately accretive to the Company and also allows us to enhance the sustainability of our existing asset base.

“It also demonstrates solid progress for our flagship Goldboro LNG project. We said we would acquire additional gas supplies for the LNG facility and we have done that.

“Not only does this deal help us secure the remaining conventional natural gas supply needed for the first train of the Goldboro LNG project, it makes Pieridae a major player in the Alberta midstream and upstream industry.”

Pieridae will also buy three sour gas plants, Waterton, Jumping Pound and Caroline, as well as the gas fields that feed them.

Shell Canada president and country chair Michael Crothers said: “I’m proud of the sour gas businesses we have built in Alberta.

“We are pleased they are going to a buyer with a strong focus on safety, community and environmental stewardship, and one that is well placed to take these assets to the next stage of their development.”

Expected to complete in the third quarter this year, the acquisition is subject to completion of customary closing conditions and receipt of other regulatory approvals.

Shell deal gives Pieridae enough gas to start Goldboro LNG

By Helen Murphy Guysborough Journal July 3, 2019

GUYSBOROUGH – The purchase of Shell Canada’s gas-production facilities in the Alberta Foothills for $190 million — combined with the earlier acquisition of Ikkuma Resources — will give Pieridae Energy enough supply for the first phase (Train 1) of its Goldboro LNG project.

The deal announced June 26 will also see Shell become a major shareholder in Pieridae. The purchase price consists of $175 million in cash and $15 million in Pieridae shares.

“We said we would acquire additional gas supplies for the LNG facility and we have done that,” Pieridae CEO Alfred Sorensen said in a release. “Not only does this deal help us secure the remaining conventional natural gas supply needed for the first train of the Goldboro LNG project, it makes Pieridae a major player in the Alberta midstream and upstream industry.”

Pieridae expects to ramp up its drilling program in the Foothills over the next four years, creating and supporting thousands of Alberta jobs. The Goldboro Project would also create 3,500 jobs during construction of the LNG facility and 200 permanent jobs, making it Nova Scotia’s biggest-ever mega project.

James Miller, Pieridae’s director of external relations, told The Journal this deal makes the Goldboro project “truly shovel ready.”

Using conventional gas sources — as opposed to fracked gas — for its first facility at Goldboro is expected to allow Pieridae to access up to US$1.5 billion in credit support from the German government. The project is eligible for a total of up to US$4.5 billion in loan guarantees from the German government.

Pieridae has a 20-year agreement with German utility giant Uniper for the full capacity of Goldboro’s first Train and half of the total project.

Pieridae continues to negotiate arrangements to use existing pipelines to transport the natural gas from Western Canada to the Goldboro facility. Global engineering firm Kellogg Brown & Root Limited is reviewing an amended version of the previously prepared front-end engineering and design study for the project and working to finalize the cost of building the facility.

Pieridae has already received all major regulatory, environmental, import/export and construction permits for the Goldboro LNG Project.