When Houston-based midstream oil company Buckeye Partners announced its intention in early May to buy Canadian developer Bear Head Clean Energy, many analysts expected it to move forward with Bear Head’s existing plans for an LNG export project at Point Tupper in Nova Scotia.

But on completing the acquisition last month, Buckeye said the project would instead focus on the development of green hydrogen and ammonia production, storage and export. This was despite Bear Head LNG being the only project in eastern Canada to have obtained all necessary federal, provincial and local regulatory approvals and permits for construction.

Hydrogen Economist spoke to Paul MacLean, the project’s COO and country manager, about the new focus on hydrogen and ammonia.

It was announced in early May that Buckeye Partners was to purchase your Bear Head Clean Energy project. Did Europe’s need for non-Russian energy following Russia’s invasion of Ukraine in February play a role in your deal with Buckeye?

MacLean: No, negotiations with Buckeye were already well underway, with talks starting early last summer and more serious negotiations commencing at the start of this year. Last year’s [memorandum of understanding: MoU] between Germany and Canada to cooperate on hydrogen development played a much bigger role in the negotiations and deal with Buckeye.

Russia’s invasion of Ukraine only served to reinforce Buckeye’s view that customers will need access to green fuels to achieve both energy security and decarbonisation efforts. We believe the Bear Head project can help Europe make progress towards its objectives in a meaningful way.

“We are focusing our efforts on developing a green hydrogen and ammonia project right now, but the LNG component is still a possibility”

Upon completion of the acquisition, it was announced that your project is to be a green hydrogen and ammonia production, storage and export hub, not an LNG export project. Is the LNG component of your project dead or simply postponed?

MacLean: I would say we are focusing our efforts on developing a green hydrogen and ammonia project right now, but the LNG component is still a possibility.

Why did you decide on producing green hydrogen and ammonia for your project at this time rather than LNG?

MacLean: The core reason is that there is no clear path to securing sufficient natural gas feedstock to support the development of an LNG export facility. We originally planned to source the natural gas for our LNG project from Marcellus, but the cancellation of some pipeline projects in the US northeast closed that door. And to move the amount of gas needed for our project from Western Canada would have required significant volumes of new pipeline capacity for parts of that route. In contrast, Nova Scotia has some of the best renewable resources in the world and is well positioned to support emerging green hydrogen and ammonia demand in Canada as well as in Europe and the US.

What do you see as Bear Head’s major advantages for the production and export of green hydrogen and ammonia compared with potential competitors elsewhere in the world?

MacLean: Our project has several major advantages. First, our location has access to abundant renewable energy resources. Second, we have a multiyear head start compared to greenfield projects. We benefit from having previously secured permitting that will only require amendments. Additionally, we have already spent over C$150mn ($116mn) developing our site, including accessing power from the local grid. Third, it will take only five days to ship hydrogen and ammonia from Nova Scotia to Europe, about half the time it takes to ship it from the US Gulf Coast. Fourth, the Germany-Canada MoU gives us excellent access to what is quickly becoming the most progressive green hydrogen market in the world.

500MW – Phase-one capacity of project

Your green hydrogen and ammonia project is to scale over time to electrolyser capacity of more than 2GW. What types of renewable energy are you planning to use for your project, and why?

MacLean: We are currently contemplating three different pathways of securing renewable power. The first pathway is to source renewable energy from [utility] Nova Scotia Power, which has ambitious plans to continue to increase its renewable energy mix. The second pathway will source a mix of newly built onshore wind and tidal power, as well as significant amounts of hydropower assuming construction of the Atlantic Loop transmission system. The third pathway will include the development of offshore wind power.

Each pathway offers its own unique time to market and scale potential. We intend to pursue all of these pathways concurrently, as different pathways will likely pair well with the different phases of our project.

Bear Head is planning to partner with onshore and offshore renewable energy developers for the green hydrogen/ammonia project. Why have you decided to go this route?

MacLean: With Buckeye, we have expertise and experience in the development, construction and operation of terminals. While Buckeye has developed onshore renewables assets, there are other companies with greater expertise in on- and offshore wind, and tidal power which is at an earlier stage of technological development. We believe that partnering with a developer of these assets will be mutually beneficial to the success of the overall project. It is important to note that the Bay of Fundy, in between Nova Scotia and New Brunswick, has the highest tides in the world.

How much electrolyser capacity and green hydrogen and ammonia production do you foresee for the first phase of your project?

MacLean: We are still in the project definition stage but are presently considering electrolyser capacity in the 500MW range for the first phase. A project of this size would produce approximately 85,000t/yr of green hydrogen and 420,000t/yr of green ammonia.

Do you have a preliminary capital cost estimate, assuming 500MW of electrolyser capacity for the first phase? If yes, what is it?

MacLean: Yes, we are looking at approximately $850mn for the first phase.

“Russia’s invasion of Ukraine only served to reinforce Buckeye’s view that customers will need access to green fuels to achieve both energy security and decarbonisation efforts”

When are you targeting first hydrogen/ammonia production for the first phase of your project?

MacLean: We are targeting first production for the fourth quarter of 2026 and first commercial production for the second quarter of 2027.

Is this production for both Atlantic Canada and export markets?

MacLean: It is early days for hydrogen consumption in Atlantic Canada, but we will work to support the local hydrogen economy as it develops. We initially expect to support export markets in both Europe and the US as demand for green fuels continues to increase.

Finally, why did you choose to tie in with Buckeye for the Bear Head project?

MacLean: We viewed Buckeye as a great fit for three reasons. They are a well capitalised company, have a great deal of expertise in project development, construction and operation, and are fully aligned with Bear Head in our core values and our commitment to facilitating the global energy transition by developing lower-carbon energy solutions for the future.

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Author: Vincent Lauerman