Newfoundland Gas Project Faces Uncertainty
About $400 billion in natural gas lies off Newfoundland's coast in Canada. To tap into this resource, companies need to overcome various challenges and uncertainties.
Fermeuse Energy Ltd., one of the companies hoping to capitalize on this opportunity, has proposed a $12-billion project to transport offshore natural gas through a 380-kilometer subsea pipeline to a floating LNG export facility for shipment to Europe. The project would require approximately 9.7 trillion cubic feet of natural gas, more than one-third of the Jeanne d'Arc Basin's estimated recoverable resources.
Fermeuse initially sought to source gas from existing offshore producers, including Exxon Mobil Corp. and Cenovus Inc., but those efforts have not produced a supply agreement. The company's CEO, Swapan Kataria, said that existing operators have little incentive to commercialize associated natural gas as long as oil remains significantly more profitable.
The future of Fermeuse's project hinges on whether the province's planned offshore natural gas royalty regime encourages companies to commercialize gas or on securing partnerships with companies developing new offshore discoveries. The province launched industry consultations on the royalty framework in June after discussing it for several years.