BEAR HEAD — A long-mothballed liquefied natural gas development in Richmond County appears to have found a new lease on life.
Australia-based Liquefied Natural Gas Ltd. announced Monday that it will purchase the partially constructed Anadarko Bear Head LNG terminal for US $11 million and develop it as a liquefied natural gas export facility.
The sale comes a full decade after sod was turned at the Bear Head site.
“I believe it’s exciting news for Richmond County … not only for Richmond County but for the entire Strait Area,” said Richmond County Warden Steve Sampson.
The municipality was aware that negotiations were underway, he said.
Anadarko had planned to build a $500-million liquefied natural gas terminal and have it supplying natural gas to the Maritimes and Northeast pipeline in 2008. The company slowed construction after it failed to secure a long-term stranded gas supply. The company had already spent $110 million on site development, concrete work for the tanks and permitting for the project.
Anadarko mothballed the project in 2005 citing difficulty in finding a supply of natural gas.
Sampson said the company appears confident it will be able to access a gas supply.
“I believe that their experience and work in that field has led them to be able to make those connections,” he said.
In a webcast conference call with industry analysts Monday, Liquefied Natural Gas Ltd. officials did not say how much they expect the development to cost. The company is also undertaking another project in Lake Charles, La. Company managing director Maurice Brand said they plan to retain 100 per cent ownership of the project.
He noted they are in talks with potential suppliers of natural gas.
It is expected to create 45-70 permanent jobs, 175 indirect permanent jobs and 600-700 construction jobs.
Liquefied Natural Gas Ltd. has been working on the project since October. The sale is expected to close next month.
Brand said the strengths of the project include a “wonderful” location, level site, the fact that no dredging is required and it is already zoned for industrial development, as well as existing pipeline infrastructure.
He said they expect to receive necessary regulatory approvals within seven months of the closure of the purchase.
A company official was due to meet Monday afternoon with a number of local officials.
Port Hawkesbury Mayor Billy Joe MacLean has been talking about activity at the Bear Head site for several months.
“They’ve been very quiet, working very hard trying to put the package together,” he said.
MacLean said it is good news for the Strait area, which has seen its share of economic difficulties, including the year-long shutdown of the paper mill that is its largest employer, and the closure of US Gypsum. Things are beginning to pick up, he added, with plans by NuStar to also invest in its Point Tupper facility.
“It’s a very needed boost for the Strait region, to give people some optimism,” he said, adding he believes if the liquefied natural gas project goes ahead it could also encourage some other small industries to set up shop there.
MacLean said he doesn’t believe Liquefied Natural Gas Ltd. would have made the purchase announcement if it didn’t have a firm line on a long-term gas supply.
Adam Rodgers, president of the Strait Area Chamber of Commerce, said he was looking forward to getting more details from the company. He called the Bear Head site a major asset for the region that has been sitting dormant.
“We’re very pleased that there’s a company that is interested in it and that they appear to be interested in pushing it ahead to actually construct a facility there,” he said.
“It’s another sign that companies and investors are looking at the Strait region and seeing it as a place where they can make money and grow their businesses,” Rodgers said.
He said there are a few proposals for liquefied natural gas developments in the Strait area and their success will all hinge on gas supply.
“They appear to have construction plans, they appear to have customers in place but none of them have secured a supply,” Rodgers said. “The issue of supply is always lingering out there because there’s a lot of competition.”
Also Monday, the company announced the hiring of two officials who had been involved originally with the Anadarko project.
The 255-acre site includes 180 acres of industrial-zoned land and 75 acres of deep-water land. The foundations are in place for two 180,000 cubic metre liquefied natural gas tanks.
In its initial production stage, it is expect to produce four million tonnes per year of liquefied natural gas.
In a news release, Liquefied Natural Gas Ltd. said it has already developed a gas supply plan and a transportation plan, and has interest from several parties to enter into tolling agreements.
Nova Scotia Energy Minister Andrew Younger indicated in a news release that he had met with Liquefied Natural Gas Ltd. representatives and is satisfied the company wants to work with the community to build a sustainable project.