petroleumworld

REPSOL plans to double winter LNG shipments
to Canapor in New England

NEW YORK
Petroleumworldtt.com 03 05 2010

Repsol YPF SA’s Canaport liquefied natural gas terminal in eastern Canada plans to double shipments into New England next winter as it takes advantage of rising demand and a pipeline bottleneck from the U.S. Gulf Coast.

The terminal, located in Saint John, New Brunswick, may ship an average of 800 million cubic feet a day of natural gas into the Northeast via pipeline compared with an average of 400 million shipped this winter, Phillip Ribbeck, president of Repsol Energy North America, said in a telephone interview.

Gas is preferred by power generators because it costs less than petroleum-based fuels and burns more efficiently and cleanly. About 25 percent of generators in New England can switch between gas and fuel oil based on price and availability, according to ISO New England, which manages the region’s power generation and distribution. Another 25 percent burn just gas.

“The amount of natural-gas fired generation is going to increase this year,” Ribbeck said in a telephone interview.

Limited access to New England will keep rising production at shale-gas deposits from Texas to Pennsylvania from competing for New England customers with Canaport, he said.

“New England is kind of insulated from that because of the pipeline infrastructure,” he said.

LNG represents about 20 percent of New England’s gas supply, according to Northeast Gas Association, a regional industry organization. Imports of the fuel account for about 3 percent of gas supplies nationwide.

Gas Prices

Natural gas in Boston was going for about $5.23 per million British thermal units yesterday, according to data compiled by Bloomberg. No. 6 fuel oil traded at the equivalent of $11.44 per million Btu. The price of gas at the benchmark Henry Hub in Louisiana was $4.77 per million Btu.

“Canaport is very well positioned to be an important part in the New England market,” said Damien Gaul, an economist and gas specialist at the U.S. Energy Department. “They can meet swing demand by their close access to the New England market. We expect a significant increase of LNG imports at Canaport during the entire year.”

LNG is gas that’s been cooled to a liquid for transport by ship to markets not connected by pipelines. The fuel is received at import terminals and converted back to a gaseous form.

Canaport has received 20 tankers of LNG since it started operating in June, Ribbeck said. The ships have a capacity equal to about 65 billion cubic feet of gas. The port is connected to New England through the Maritimes & Northeast Pipeline.

Regional Terminals

The port has the capacity to put about 1 billion cubic feet of gas a day into pipelines, similar to the capacity of Boston- area terminals run by GDF Suez and Excelerate Energy. GDF Suez is planning to open another Massachusetts terminal this year.

“I don’t believe you need any more LNG terminals,” Ribbeck said. “There is no case that I can come up with at this point and over the next five years where you need additional terminals.”

U.S. LNG imports may rise 44 percent in 2010 to about 1.83 billion cubic feet a day, the Energy Department forecast on Feb. 10 in its monthly Short-Term Energy Outlook.

About 50 percent of Canaport’s LNG imports come from Trinidad and Tobago, where Repsol, Spain’s largest oil company, produces natural gas, Ribbeck said. Ships from Egypt, Norway and Qatar also supply the port. Supplies will start coming from Peru in the middle of the year, he said.

Repsol owns 75 percent of Canaport, and St. John-based Irving Oil Corp. owns 25 percent. Repsol has contracted for 100 percent of the capacity.

Story by Moming Zhou from Bloomberg
-Mzhou29@bloomberg.net

Bloomberg 03 04 2010

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