A Texas-based energy analyst says Irving Oil Ltd. may be eyeing the Ontario and Quebec energy markets after receiving approval by U.S. authorities to export natural gas to Canada.
Irving Oil Terminals of Portsmouth, N.H., a subsidiary of Irving Oil Ltd., has been given approval from the U.S. Department of Energy to ship 58 billion cubic feet of natural gas from the United States to any entry point in Canada.
Barbara Shook, an energy analyst in Houston, Texas, said she believes Irving Oil is likely trying to cash in on a new trend of shipping shale gas from the United States into Ontario and Quebec.
"Eastern Canada now gets most of its gas supplies from the U.S. — not from western Canada — because it's far more economical," she said.
Irving Oil said in a statement that it does not comment on its day-to-day operations.
But the company will be asked to file monthly reports with the U.S. energy department on how much natural gas they export, what the price is and where the gas is coming from.
The company’s ability to export natural gas into Canada will not require a lot of new infrastructure.
Shook said Irving Oil doesn't need a pipeline or a gas well. Instead, it can simply have its traders at a desk in Saint John or elsewhere buy the gas and the pipeline capacity.
"Taking space in one of the pipeline companies that would deliver gas to the border. Put it into TransCanada [pipeline] and then re-selling the gas to an end user in Ontario or Quebec," she said.
The permit lasts for two years and is not for a large volume of natural gas.
The 58 billion cubic feet approved would be less than two months of the capacity of the Canaport LNG terminal in Saint John.
Irving Oil owns 25 per cent of the Canaport LNG terminal. Its capacity is 1.2 billion cubic feet per day, although it has been operating at a little over 10 per cent for the past year and under 30 per cent for a year before that.