[Promoted] Bear Head LNG Remains on Firm Ground

Most attention surrounding Canada’s potential to join the global LNG industry is focused on its west coast, but some 6,000 km east of Kitimat, British Columbia, Liquefied Natural Gas Ltd. (LNG Limited) of Australia is moving forward with its 8mn metric tons/year (mt/yr) Bear Head LNG project, on the north shore of Nova Scotia’s Strait of Canso.

Greg Vesey, CEO of LNG Limited and president of Bear Head LNG and its twin, Magnolia LNG in Louisiana, will deliver a keynote address on May 15 at the Canada Gas & LNG Conference in Vancouver and take part in a panel discussion later the same day exploring the challenges and opportunities facing Canadian LNG developers.

Vesey joined LNG Limited in April 2016 after a 35-year career in the energy sector with Chevron and Texaco, most recently as president of Chevron Natural Gas and vice-president, gas supply and trading, from 2011 through 2015, where he was responsible for Chevron’s global LNG trading activity. In 2015, he completed a four-year term on the board of the Natural Gas Supply Association of America, serving the final two years of that term as chairman.

“Joining LNG Limited and our projects, Bear Head LNG and Magnolia LNG, made a lot of sense after my career at Chevron,” Vesey told NGW ahead of the conference. “I was intrigued by the company’s innovative technology approach and the quality of both project sites – LNG Limited has an amazing opportunity and I have no doubt we will succeed.”

Like most other LNG projects, however, Bear Head has faced its share of challenges, notably with sourcing feed gas, either from western Canada or from elsewhere.

“We have significant interest from western Canadian gas producers that wish to understand the pipeline flow for transporting gas east to Nova Scotia,” he said. “The gas pipeline discussions are ongoing and remain productive.”

A key component of the Bear Head project is the Bear Paw Pipeline, a 62 km lateral that would link the proposed terminal on Nova Scotia’s Strait of Canso with the Maritimes & Northeast Pipeline (M&NP) at Goldboro. M&NP links natural gas produced in Nova Scotia’s offshore and onshore production in New Brunswick with markets in Atlantic Canada and the northeastern US and is also capable of bringing in gas imported from the northeast US.

That bi-directional flow could be key for Bear Head – with Nova Scotia’s offshore production winding down, there is significant spare capacity in the M&NP system to source feed gas from the Marcellus and Utica shale fields in the US, one of a variety of supply options Bear Head is exploring, Vesey said.

“Our discussions on gas supply are ongoing and remain productive,” he said. We are exploring different ways to bring gas to Bear Head both through existing pipelines and/or potential brownfield or greenfield construction - our goal is to limit any addition of any new pipe to the greatest extent.”

While Bear Head hasn’t reached any agreements with potential offtakers, it has prepared liquefaction cost estimates which suggest it could put LNG on the water for about $2/mn Btu less than west coast projects.

Nor has the company announced a planned build-out of the four trains at Bear Head, although Vesey noted that it would be “logical” to assume that Bear Head would follow the same model as Magnolia, where all four trains will be built at once, as that is more economic from a project finance perspective.

“It is logical to assume the same for Bear Head, with four trains desirable but the potential to FID with just the first three trains,” he said. Bear Head also has the necessary approvals to add two more trains, increasing capacity to 12mn mt/yr.

Each of the Bear Head trains carries a nameplate capacity of 2mn mt/yr, but because of the colder ambient temperatures in Nova Scotia, the actual capacity of each train will likely exceed nameplate – better estimates will be determined as part of the EPC process, Vesey said.

Greg Vesey, CEO of LNG Limited and president of Bear Head LNG will be a Speaker at Canada Gas & LNG Exhibition and Conference - May 14-16, Vancouver, Canada.