Energy company drops idea of shipping LNG to Europe, cites associated costs

Spanish energy company Repsol says it won't be expanding its Saint John LNG terminal to export liquefied natural gas to Europe because the associated costs make the project unviable.

Europe faced a serious supply crunch last year as it weaned itself off Russian oil and gas following Moscow's unprovoked invasion of Ukraine.

As they scrambled to replace Russian gas, Germany and other EU members turned to Canada as a possible solution to their supply woes.

Repsol's current import terminal in Saint John, New Brunswick was considered as an option to export natural gas across the Atlantic.

But as Bloomberg News first reported, the company considers the project too costly. Company spokesperson Michael Blackier told CBC News that Repsol conducted a viability study on the project.

"The overall costs to ship the gas to our terminal are too high," Blackier said in an email to CBC.

U.S. LNG exporters boosted shipments to Europe by more than 137 per cent in the first 11 months of 2022 — an increase that has resulted in tens of billions of dollars in new revenue, according to U.S. Energy Information Administration (EIA) data.

During his visit to Canada last summer, German Chancellor Olaf Scholz said he was open to the idea of accepting more gas from Canada but added the country lacks infrastructure and a proven business case to boost exports across the Atlantic.

Over the past decade, businesses have pitched 13 LNG export terminals for Canada's West Coast and five for the East Coast.

These projects have failed for a variety of reasons.

European Commission President Ursula von der Leyen poured cold water on the idea of Canada exporting more natural gas to Europe during her recent visit.

Both Scholz and von der Leyen have said they're interested in buying clean hydrogen energy from Canada. 

"We will continue to support our European friends and allies as they accelerate their clean energy transition and eliminate their dependence on Russian energy," a spokesperson for Natural Resource Minister Jonathan Wilkinson's office told CBC in an email.

"In the case of [Saint] John LNG, the project proponent has informed us that their evaluation concludes there is no business case, as the cost of transporting gas across the significant distances [is] too high to support project economics."