Promising conditions have Goldboro LNG on track for final investment decision in 2018

Final challenges are tariff, carbon tax

By Helen Murphy    
January 10 2018

GUYSBOROUGH – Gas supply was long thought to be the main challenge for the proposed Goldborog LNG project, followed by the $8-$10 billion price tag to build the facility. But as Pieridae Energy inches closer to a final investment decision, the remaining challenges relate to government regulations.

Thom Dawson, president of Pieridae's LNG division, says the abundance of cheap gas in Alberta and British Columbia in need of a market is good news for the project. Pipelines carry that gas into the Northeast U.S., and with a proposed reversal of the Maritimes and Northeast Pipeline following completion of the Sable Offshore Energy Project, it would make its way to Goldboro for the LNG facility.

Sable gas production is expected to end in 2019/2020, which dovetails nicely with Pieridae's plans to be operational with Goldboro LNG in late 2021 or early 2022.

"There is just so much gas in North America," Dawson told The Journal during an interview Tuesday. "What is happening in Canada is the Canadian producers are just having a hard time getting product to market."

On the financing side, Dawson said the big capital investments "are proving to be fairly easy, largely because we have such a good customer on the other end."

In 2013, Pieridae Energy signed a 20-year sales agreement with E.ON Global Commodities SE, a subsidiary of E.ON SE, one of the world's largest investor-owned power and gas companies, for the purchase of LNG from the Goldboro LNG project.

When asked about remaining barriers to the project becoming a reality, Dawson pointed to a tariff on steel imports and uncertainty around the new carbon tax in Canada.

In 2016 a tariff was placed on steel imports from Asia and Spain, and then expanded to include large steel modules -- the type needed for this facility -- which now face a 50 per cent tariff.

"The problem is no one in Canada can build them. So it's a tariff that protects no one," said Dawson.

The federal government's new carbon tax is another challenge. Unlike Canada, Dawson said most countries exempt exports from their carbon tax. He also highlighted the problem of uncertainty between federal policy and provincial regulations related to the carbon tax.

As Pieridae pursues solutions to these challenges, Dawson said the company is still on track for a final investment decision on Goldboro LNG this year.