GOLDBORO – It is back to the drawing board for a Calgary-based company that had its sights set on constructing a multi-billion liquefied natural gas (LNG) complex in Guysborough County.
In what could be described as a surprise, depending on how one views the promise offered by several industrial initiatives over the past decade or more in Guysborough County, Pieridae Energy Limited announced late last week that it would not be moving forward – in its current proposed form – with the Goldboro LNG project.
“Very simply – we didn’t have the commitment [required] from a variety of parties,” Pieridae chief executive offer (CEO) Alfred Sorensen told The Journal in a Monday morning (July 5) interview.
A couple days earlier – in a July 2 release – Sorensen indicated that “cost pressures and time constraints due to COVID-19 have made building the current version of the LNG project impractical.”
The announcement came a couple days after the deadline (June 30) that the company set for making its final investment decision.
When asked whether it was higher than anticipated construction cost estimates, or the inability to raise the monies required to move forward that led to the decision to pull the plug, Sorensen offered: “a little bit of both.”
He explained the price that they received for building the project – compared to similar initiatives along the Gulf Coast – was “significantly higher;” specifically, 26 per cent higher. Sorensen did not provide a number for the estimated cost to move forward.
“We were three weeks away [from reaching our goal], but it did not happen as we had hoped,” he said.
Reflecting on some of the challenges involved in the effort to reach the required financial target, Sorensen noted that Pieridae is a “relatively small company” that tried to take on a “very big project.”
“[It was] very difficult to try to raise money on our own,” he said.
Sorensen agreed that an economy staggered by COVID-19, not to mention “increased costs” spurred by the ongoing global pandemic, played a role in their decision. It also made an already challenging effort to raise capital even more difficult.
When it comes to alternatives, without getting into details, he said a return to the original project plan could happen, if a partnership could be formed.
As for what a revamped Goldboro LNG project might look like, Sorensen said “much smaller.”
“It is not quite that simple,” Sorensen said, when asked if a downsized version – one that could be financed now – could move forward right away, noting the need to complete re-engineering for any retooled initiative.
He explained that there are also “new technologies” that they are exploring, including modular design options – where buildings are “brought and assembled” as part of a potential construction process.
Sorensen noted that the company is in the “early stages” of deciding what’s next for the initiative.
“I don’t know that answer,” he said, when asked when any decisions on the future would be made.
Getting back to what stalled the project – not enough money to move forward with their investment – there has been persistent talk in recent weeks and months that the company approached the federal government for funding – with some reports indicating that a request had been made for $925 million in the form of a grant, repayable contribution or loan guarantee.
As recently as last week, the federal government – specifically, Central Nova MP Sean Fraser – indicated Pieridae had not submitted any funding application.
“We were in discussions,” Sorensen offered, when asked if they made a formal application for funding from the federal and provincial governments.
He pointed out that there was “no final ask made.”
Sorensen noted that they “decided to terminate” the project before they reached that point, when it comes to seeking government monies.
“There was no point,” he said, indicating that any federal and provincial funding would not have been enough for the company to reach its financing goal.
In previous interviews – with Sorensen or James Millar, Pieridae’s external relations director – a common refrain was that the company was looking for a ‘hand up, not a hand out,’ through options such as a loan guarantee. Considering the transformational potential of the project, they suggested that it should be something considered by the levels of government.
Although the company could not make the final investment decision to move forward, Sorensen said in the July 2 press release that Pieridae made “tremendous progress” in advancing the project.
“We were construction ready, if we had been able to reach a cost structure that worked for us,” he offered.
As Sorensen said last week, he indicated the project’s fundamentals “remain strong,” including “robust” LNG demand from Europe and high global LNG prices, Indigenous participation, a net-zero emissions pathway forward and support from jurisdictions across Canada.
“This speaks to our ongoing efforts to find a partner to take advantage of these opportunities,” he noted in the same announcement.
Pieridae said it reached several milestones – such as receiving provincial approval, with conditions, to re-route Highway 316, the main roadway to and from the proposed location. They are also proud of the relationship that they fostered with Nova Scotia’s Mi’kmaw, including coming to an agreement with Wskijnu’k Mtmo’taqnuow Agency Ltd. – a corporate body owned by 13 of their First Nation communities in the province – to be part of the construction of a large-scale work camp at the LNG site, which would have an employed, by company estimates, 5,000 unionized workers at its peak.
The company also had a 20-year contract with Uniper, a German-based company that had committed to purchasing all gas coming from Goldboro LNG’s first ‘train’ (facility).
As for how the now-mothballed multi-billion project would have looked, if they had made the final investment decision to move forward, Pieridae planned to construct a natural gas liquefaction plant, along with facilities for the storage and export of liquefied natural gas (LNG), including a marine jetty for loading. The company estimated that the facility would produce approximately 10 million metric tons of LNG annually, with an on-site storage capacity of 690,000 cubic metres.
The LNG facility would have been constructed in the Goldboro Industrial Park – adjacent to the Maritimes & Northeast Pipeline, a 1,400-kilometre transmission system that carries natural gas between developments in Nova Scotia, Atlantic Canada and the northeastern United States.
The target markets would have been located in Europe, South America and Asia.
In previous interviews, company officials – if everything, including the final investment decision, unfolded as planned – hoped that shovels would be in the ground in the coming months, considering the deal with Uniper guaranteed delivery of the first gas between August 2025 and February 2026.
‘We’re still in’
Although that timeline has been upended by Pieridae’s recent decision, Municipality of the District of Guysborough (MODG) Warden Vernon Pitts remains optimistic, describing the move as an opportunity for the company to “recalculate and reformulate.”
“People have to realize that we have just gone through 18 months of a global pandemic,” the veteran municipal politician reminded, offering that would make getting a multi-billion dollar project off the ground – such as Goldboro LNG – “that much harder.”
Noting that the company has “spent a lot of money” on developing the project, Pitts said MODG “takes some comfort” in the idea that Pieridae has not scrapped it entirely.
He credited the company for taking a step back to decide what they need to do to compete in a “new economic environment.”
“We’re still in,” Pitts said of the MODG’s continuing support of the project, which he added has been the case “since day one.”
In the fall of 2015, the municipality sold 265.6 acres of land in the Goldboro Industrial Park to Pieridae for $3.2 million – property that Sorensen said his company, at this point, will retain. Although there is no contractual commitment, if they did decide to sell the land, Pitts suggested providing MODG with the right of first refusal would be “good business” for the company.
There have been critics
“We are grateful for the amount of support that we have received,” Sorensen said, particularly from MODG and its officials, who he noted have been “on side” since his company pitched its idea.
He added that the local municipality did everything possible “to help us get to the finish line.”
As for the other levels of government, Sorensen offered that there needs to be a “more conducive” atmosphere for such initiatives. When asked to explain, he talked about the need for “more clarity,” and making “more timely decisions.”
That uncertainty, he suggested, was a contributor to the project – in its proposed form – “falling apart.”
Sorensen also touched on his “aggravation” with critics of the project, particularly those predicting the demise of LNG.
There have also been other ardent critics, including those that predicted – with Goldboro LNG up and running – it would challenging, at best, for Nova Scotia to reach its greenhouse gas (GHG) emissions targets. Like-minded groups came together in a call for a federal environmental review of the initiative.
Some Mi’kmaw groups have voiced concern over the potential threat to women and girls that could come with a construction camp housing more than 5,000 workers.
And, of course, there has been opposition from those who offer that the potential environmental issues created by any LNG project outweigh the benefits.
‘Ready for it’
Whatever happens with Goldboro LNG – in any way, shape or form – Pitts noted that his municipality will be “ready for it.”
“We will just have to wait and see,” Pitts said.
And, considering that Goldboro is home to the only natural gas pipeline on the east coast of Canada, he predicted a bright future.
“Something is going to happen there,” he concluded.