It feels like spring today, so that was okay.
Good morning. My name is Alfred Sorensen. I'm the president of Pieridae Energy.
We are currently developing a liquefied natural gas terminal on the east coast of Canada to export gas primarily to the European Union. About a year ago we concluded our first transaction with E.ON, the German utility, to export 5 metric tonnes and we are currently marketing the second train.
I would say, when you look at these big projects, they take a considerable amount of time to get up and running. We've been working on the development of the project for about two years and it will take about another three and a half years to four years before we'll be able to begin moving volumes into Europe.
There is an absolute opportunity, from a pricing perspective, to move large volumes of natural gas out of North America. Certainly in the United States the Marcellus or Utica basins have reduced the cost of developing unconventional gas reserves significantly, and that technology continues to be taken throughout North America. So from a supply perspective, the combined U.S.-Canada gas reserves certainly act as a potentially large supply basin for Europe, particularly western Europe.
When you look at how gas from Canada could access markets further east, certainly that becomes a more difficult opportunity given the fact that the farther you go away, the more costly it is to move the gas. We've begun speaking with both Poland and the Baltic nations as to how we might be able to move gas into those environments. Certainly, the continental gas market in Europe is already very liquid in terms of how gas moves between east and west, north and south. That's actually one of the reasons that I think Canada could play a very good role in opening up markets in both western and central Europe. We already have had 20-plus years of a deregulated gas market, which certainly lends itself well to bringing that type of technology and economic certainty to buyers in those markets.
One big aspect of our project is that it does bring a new supply, which would certainly diversify Ukraine and Europe away from having one big supplier, such as Russia. There is some degree of security of supply that comes from having multiple suppliers versus having one or two suppliers. Probably the one aspect of this whole transaction that might be interesting for other players is to bring in multiple players and perhaps reduce the influence of one player over the economies of western Europe. We have seen with the transaction that we recently completed with E.ON that a large part of the reason they came to our project was that it provided for some diversification away from Russia.
The things that buyers need to look into when they're looking to do these long-term contracts—because the amount of capital that's put into our project is roughly about $8 billion, and thus certainly on a Canadian scale, as large as an oil sands projects—is that buyers have to be able to commit for 20 years and have a credit rating that allows for the debt support, and there has to be a regasification strategy in place. Often these projects don't develop properly together so that liquefaction may come on before gasification, and in order for the whole process to work there has to be a considerable amount of coordination on both sides of the ocean. One area where we've seen a considerable amount of interest in the last little while is how volumes of natural gas can actually move into the European Union or central Europe, but it really does require significant new infrastructure.
Two weeks ago when I was on the Prime Minister's trade visit to Germany, Chancellor Merkel made a very good point that it's good to talk about moving away from one supplier, but that significant infrastructure needs to be in place before that can happen. What I've seen in the two or three weeks since we were there is that there is considerable interest in Germany particularly, to begin to build that infrastructure in-country.
In conclusion, I would say that in our dealings so far, there has certainly been significant interest from major European players to look at Canada as a major supplier of energy. I think, to date, some of that interest has been more on the west coast rather than on the east coast. Certainly, eastern Canada is geographically well-situated to be able not only to bring volumes through the United States but also to develop our Canadian volumes such that we can play a significant role in energy security for western and central Europe.
Thank you.