Anardarko sells Bear Head project
Securing gas supply still a challenge
GUYSBOROUGH - The Strait area has been looking for positive economic news lately, and some saw it on Monday with Anardarko Petroleum's announcement that it has sold its proposed liquefied natural gas (LNG) terminal at Point Tupper.
Anadarko said it has agreed to sell Bear Head LNG Corporation, a wholly owned subsidiary that plans to develop a liquefied natural gas (LNG) receiving terminal at the Strait of Canso.
Under the agreement with U.S. Venture Energy, a private equity firm, Anadarko will receive $125 million, as well as an 18-month option to secure up to 350 million cubic feet per day of natural gas capacity at competitive rates.
"With the sale, we are recovering our investment and a reasonable premium, while retaining the ability to supply LNG to the Canadian Maritimes and U.S. Northeast consuming regions," Anadarko senior vice-president Karl Kurz said.
"From the beginning, Anadarko pursued Bear Head as a means to commercialize international natural gas resources. We committed to our investors that we would either secure an upstream supply source or would explore other options with our terminal within a two-year period. With this agreement, we retain the upstream opportunity in the near term without owning and operating the LNG terminal," Kurz said.
Although Anardarko says it has invested $100 million in site preparation, the company had struggled to secure a gas supply for the project and officially put its Bear Head plans on hold in March.
Kevin Dunn, president of Keltic Petrochemicals Inc., which plans to build a $4.5 billion LNG terminal and petrochemical plant at Goldboro, said the Bear Head deal raises a lot of questions.
During an interview Tuesday, Dunn said it's extremely hard to get a supply of liquefied natural gas to North America in the current market, and he wonders if the American investors have done their due diligence on the project. He said he has been told that the investment firm that purchased the project is a new entity which has only been registered in the U.S. for a couple of weeks.
Keltic had its own challenges securing an LNG supply in the past and now has a supply deal with Maple Gas.
"It's a big poker game and I wouldn't get into it at this time," said Dunn.
The provincial government's development agency, Nova Scotia Business Inc. (NSBI), is optimistic about the new Bear Head deal.
"Nova Scotia's energy picture has improved considerably in the past 10 days," said Premier Rodney MacDonald in an NSBI release Monday. "Two of the province's most important energy projects, Deep Panuke, and now Bear Head, have been re-ignited. These encouraging developments, and the opportunities associated with them, hold much promise for our talented engineering and industrial workforce."
NSBI, a longtime supporter of the Bear Head project, helped facilitate the sale.
"Throughout the process, a primary objective was to ensure that the new ownership group had the financial and management capacity to bring the terminal into an operational phase. In addition, project partners worked to ensure that all community benefit commitments would remain in place. NBSI is confident that both objectives will be fully met by US Venture Energy," the agency's release stated.
The project has all required provincial and federal regulatory approvals in place.
"The restart of the Bear Head LNG project is very positive for the province," commented Chris Huskilson, president and CEO of Emera Inc. "Ensuring a strong and stable supply of natural gas to the region is a key building block in creating the energy future that Nova Scotians expect."
The Bear Head LNG project was initiated in 2002 by Access Northeast Energy of Calgary. It was purchased by Anadarko of Houston in 2004. The 246-acre site boasts a natural breakwater and very deep berths in an ice-free, protected harbour.
