Canada’s Tourmaline to supply Cheniere in Texas
Tourmaline Oil, Canada’s largest natural gas producer, and US LNG developer Cheniere Energy said July 15 they had entered into a long-term gas supply agreement (GSA) under which Tourmaline will supply 140mn ft3/day of natural gas to Cheniere’s Corpus Christi Stage III expansion in Texas.
The 15-year contract, which begins in 2023, will result in the production of about 0.85mn mt/yr of LNG, which will be marketed by Cheniere.
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Under terms of the contract, Cheniere will pay Tourmaline an LNG-linked price for the gas, based on Platt’s Japan Korea Marker (JKM), after deductions for fixed LNG shipping costs and a fixed liquefaction fee. JKM is currently trading at around US$12.98/mn Btu, Tourmaline said.
The gas will come from Tourmaline’s Deep Basin assets in Alberta or its Montney reserves in BC, and will be delivered under long-term firm transportation services Tourmaline has secured with TC Energy. Total tolls from western Canada to Texas are estimated at about US$0.86/mn Btu, Tourmaline said.
“Our long-term supply agreement with Cheniere is the next important step in Tourmaline’s evolving market diversification strategy,” Tourmaline CEO Mike Rose said. “We are pleased to be supplying low emission Canadian natural gas with Cheniere to growing international markets.”
Corpus Christi Stage III is being developed to include up to seven mid-scale liquefaction trains with a total expected nominal production capacity of approximately 10mn mt/yr. It has received all necessary regulatory approvals, but Cheniere has yet to make a final investment decision on the project.
“This latest agreement with Canada’s largest natural gas producer demonstrates the breadth of Cheniere’s natural gas resource supply and the range of our commercial options,” Cheniere CEO Jack Fusco said. “This commercial agreement is expected to support our shovel-ready Corpus Christi Stage III project while enabling Canadian natural gas to reach international LNG markets.”