Energy Canaport LNG majority owner Repsol seriously weighing doubling terminal's capacity

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Canaport LNG's owners are well along in their efforts to decide whether to double the terminal's capacity in another energy mega-project that would create several hundred more construction jobs for up to three years.

"Definitely we're interested both as shareholders and as capacity holders in the terminal to see expansion occur in a timely manner," said Phil Ribbeck, president of Repsol Energy North America, adding that there "are no firm plans yet."

Repsol is gauging market demand for natural gas, lining up additional supply of LNG and assessing pipeline capacity, particularly in the northeastern United States.

Only once the company has decided the conditions are right will it seek the necessary environmental and regulatory approvals, said Ribbeck, who is based in Houston.

Asked when that point will be reached, he said, "I wish I could tell you for certain right now. There are so many issues in play that I just can't say. The decision will be made as soon as possible in order to meet the market needs."

Still, Ribbeck indicated that, at this point, going ahead looks promising.

Repsol is "pretty far down the road" assessing the market demand and potential LNG supply. The market could need more gas from Canaport between 2012 and 2015, while some LNG suppliers are interested in shipping to the terminal by 2012 and others in 2014 and beyond, he said.

Canaport LNG had already speeded up the construction of a third storage tank, which began construction early this year, sooner than anticipated.

Doubling capacity from one billion cubic feet per day to two billion would require the construction of two more storage tanks, making for five in total.

The expansion project would take 30 to 36 months, Ribbeck estimated.

As things stand, Canaport - Canada's first LNG regasification terminal - could meet 20 per cent of New England's natural gas needs.

Canaport LNG has a flexible design that allows for expansion - a prospect that has long tantalized the local construction industry.

"We're aware of this possibility," said Pat Darrah, executive director of the Saint John Construction Association.

"We want to get the first stage done on time and on budget and we look forward to doing the next two tanks.

"It'll give us just a whole lot more expertise from the contractors' point of view."

Irving Oil Limited spokeswoman Jennifer Parker said the company had no comment on possible expansion.

"At this point, we're focused on what's currently being constructed," she said.

Repsol Energy North America's parent company, Repsol YPF of Spain, owns 75 per cent of Canaport LNG and Irving Oil owns 25 per cent.

The $750-million facility is three-quarters built and is scheduled to go into operation by the end of 2008. Construction employed as many as 700 workers at peak periods.

Canaport has generated contracts for more than two dozen local companies, including two firms that have built the concrete exteriors and the steel interiors and roofs of the tanks.

"There's been a huge participation by the electrical and mechanical contractors locally and by the local labour force," said Darrah.

While doubling capacity would mean expanding to two billion cubic feet per day, Ribbeck said the engineers are confident they could boost the send-out to 2.5 billion cubic feet per day.

Those volumes would not necessarily double tanker traffic in the Bay of Fundy, as the industry is increasingly served by larger ships, he said.

Neither would it mean installing more pipeline in Saint John, where pipeline routes were at the centre of a divisive public debate.

Ribbeck said that higher compression within the existing pipeline would be all that's needed in Saint John.

In rural areas of New Brunswick, the existing $350-million Maritimes & Northeast pipeline would have to be "looped," meaning it would have an extra parallel pipe installed, to allow for the extra gas.

The biggest challenge Canaport LNG would face, said Ribbeck, is sourcing skilled labour if Irving Oil's Eider Rock project, the proposed second oil refinery in Saint John, goes ahead and a second nuclear reactor at Point Lepreau.

"To me it's a significant challenge," he said.

"If Eider Rock goes ahead, and I know Irving wants to make that happen, you're going to have a lot more stress on the labour force."