Shell sells upstream assets for Goldboro LNG in Nova Scotia

Tuesday, 02 July 2019
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Pieridae Energy buys Shell Canada Energy assets in Alberta to boost export plan

LNG Journal editor

Pieridae Energy, the developer of the German-backed Goldboro LNG project in the Canadian Atlantic province of Nova Scotia, signed a purchase and sales agreement with Shell Canada Energy to acquire all of Shell’s midstream and upstream assets in the southern foothills of Alberta province to boost its LNG feed-gas reserves.

The Calgary-based company is seeking to build a liquefaction plant with an initial two Trains northeast of the Nova Scotia capital, Halifax.

Cash and shares

The purchase price of the Shell Alberta assets is C$190 million (US$145M), including C$175M in cash to be raised by Pieridae through the issuance of debt and equity.

The balance will be in the form of the issuance of Pieridae common shares to Shell with an aggregate value of C$15M. Its shares are on the venture list of the Toronto Stock Exchange for small commodities companies.

“Closing of the acquisition remains subject to satisfactory completion of due diligence by Pieridae on the assets,” said a Pieridae statement.

The whole deal is expected to be finalized in the third quarter of 2019.

“This acquisition will be immediately accretive to the company and also allows us to enhance the sustainability of our existing asset base,” said Pieridae’s Chief Executive Alfred Sorensen.

“It also demonstrates solid progress for our flagship Goldboro LNG project. We said we would acquire additional gas supplies for the LNG facility and we have done that,” added Sorensen.

“Not only does this deal help us secure the remaining conventional natural gas supply needed for the first Train of the Goldboro LNG project, it makes Pieridae a major player in the Alberta midstream and upstream industry,” stated the CEO.

“But more than that, it creates a solid, ongoing foundation for the Company as we continue to build toward becoming the first Canadian company to market LNG off the east coast to global consumers,” concluded Sorensen.

Shell has helped Goldboro LNG move forward as its own LNG Canada project in British Columbia survives as the only large-scale venture in BC from a dozen previously proposed.

Shell’s plans will cost C$40 billion (US$30.2Bln) to implement compared with the C$10Bln projected cost of the Nova Scotia plant.

The conventional natural gas assets Pieridae controls are expected to allow the company to access up to US$1.5 billion in credit support from the German government to develop these upstream assets as part of the Goldboro project.

The Shell assets currently produce approximately 28,623 barrels of oil equivalent per day consisting of around 118.9 million cubic feet per day of natural gas, 5,646 barrels per day of natural gas liquids and 3,161 bbl/d of condensate and light oil.

Pieridae will also acquire three deep cut, sour gas processing plants (Jumping Pound, Caroline and Waterton) in the acquisition, with a combined capacity of approximately 750 MMcf/d, a 14 percent working interest in the Shantz sulphur forming plant and approximately 1,700 kilometres of pipelines.

Trading in Pieridae’s shares had been halted on the TSX Venture exchange June 25 at the request of the company pending the announcement.

Pieridae's lack of large volumes of feed-gas has been a project weakness as all other aspects of the venture have moved forward.

The company has signed a 20-year take-or-pay contract with German utility Uniper which the Canadian company said was worth around C$35 billion (US$26.5Bln) over the life of the Goldboro LNG project.

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