The $700m Gros Cacouna LNG terminal project backed by Petro-Canada and TransCanada Corp. may have been stalled due to lack of a supply contract, but is not entirely over just yet, according to leading source involved with the project.

Hal Kvisle, TransCanada’s CEO, said yesterday there’s a strong case for two LNG regasification terminals on the St. Lawrence, one at Gros Cacouna below Rivière-du-Loup, and another at Lévis, opposite Quebec City, based on projected energy market growth in Quebec, Ontario and New York.

Inflation in steel, pipe, construction and many other costs have forced second thoughts about Gros Cacouna however, he noted after addressing the Canadian Club of Montreal.

“It's not just the long-term gas supply issue because there’s plenty of natural gas, though the people controlling those supplies are naturally playing their cards astutely,” he said.

“We’re talking to major gas companies, including Gazprom, despite its decision to be long-term gas supplier for the Rabaska terminal at Levis.”

Kvisle raised the possibility that Rabaska’s capacity might be expanded, effectively replacing Gros Cacouna, not ruling out TransCanada and Petro-Canada becoming partners in the Rabaska consortium - now comprised of Gaz Metro, Ontario’s Enbridge and Gaz de France.