Cheniere Energy Inc. inched closer to the expansion of its Corpus Christi LNG export facility with a deal announced July 15 with the largest natural gas producer in Canada—Tourmaline Oil Corp.

In separate releases, the two companies said they had signed a long-term gas supply agreement for Tourmaline to provide 140,000 MMBtu/d of natural gas to Corpus Christi Stage III, an expansion project for up to seven midscale trains adjacent to Cheniere’s Corpus Christ LNG export facility on the Texas Gulf Coast. Further, the LNG associated with this gas supply, approximately 0.85 million tonnes per annum (mtpa), will be marketed by Cheniere with Tourmaline receiving an LNG-linked gas price based on the Platts Japan Korea Marker after deducting fixed shipping costs and a fixed liquefaction fee.

“For context, this deal is similar to agreements signed with APA and EOG back in 2019 at a fee of $2.25/MMBtu to underpin Stage III at Corpus Christi,” wrote analysts with Tudor, Pickering, Holt & Co. (TPH) in a research note on July 16.

The Corpus Christ Stage III project is fully permitted and expected to add total production capacity of approximately 10 mtpa of LNG, according to the Cheniere website.

While timing and cost details of sanctioning new trains has not yet been disclosed by Cheniere for the expansion project, TPH analysts noted that the agreement with Tourmaline, which is for 15 years beginning in early 2023, marks another constructive step toward reaching a final investment decision.

Tourmaline also added in its release that it had secured long-term firm transportation with TC Energy Corp. on existing pipeline systems for total tolls of $0.86/MMBtu, which it said would allow for Tourmaline’s natural gas from the company’s Alberta Deep Basin or British Columbia Montney complexes to access Asian LNG market pricing.

In a statement commenting on the gas supply agreement, Jack Fusco, Cheniere’s president and CEO, 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.”

Comments