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Kitsault Energy Ltd. Application for a Licence to Export Natural Gas as as Liquefied Natural Gas (NEB Reasons for Decision)

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Licence to Export – Liquefied Natural Gas


Kitsault Energy Ltd. (“Kitsault”) applied to the NEB pursuant to section 117 of the National Energy Board Act (“NEB Act”) for a licence to export natural gas in the form of liquefied natural gas (“LNG”) on the following terms and conditions:

(a) A term of 20 years starting on the issue date of the licence and not extending beyond 31 December 2035;

(b) A 15 per cent annual tolerance, a maximum annual export quantity of 32.2 billion cubic metres (109m3), or 1 136 billion cubic feet, of natural gas;

(c) A maximum term quantity of 644 109m3 (22.7 trillion cubic feet) of natural gas over the term of the licence, including tolerance;

(d) A point of export at the outlet of the loading arm of the natural gas liquefaction terminal to be located near Kitsault, British Columbia; and,

(e) An expiration clause where, unless otherwise authorized by the Board, the Licence will expire at the end of 31 December 2024 if LNG exports have not commenced on or before that date,

(the “Export Licence”).

Kitsault submitted that the quantity of gas it sought to export did not exceed the surplus remaining after due allowance has been made for the reasonable foreseeable requirements for use in Canada as required by section 118 of the NEB Act. Kitsault submitted that in determining the supply and demand forecast, it only considered its own export volumes, submitting that no LNG export facility have reached a final investment decision.

Kitsault submitted that the North American market was generally efficient, transparent, liquid, and capable of responding to changes in supply and demand through price. Kistault also submitted that the resource base in Western Canada was very large, such that there were sufficient reserves for domestic demand over the 20-year term, as well as surplus for additional growth for either excess domestic demand or other export projects as well. Kitsault submitted a demand sensitivity analysis considering a 20 percent increase in Canadian demand over the term of the Export Licence, and found that it would not change its overall conclusions of adequate supply for domestic markets.

The NEB agreed with Kitsault, holding that the exports did not exceed the surplus remaining after due allowance has been made for the reasonable foreseeable requirements for use in Canada as required by section 118 of the NEB Act. The NEB also held that the estimates provided in the application were generally consistent with the NEB’s own monitoring effects.

The NEB therefore granted the Export Licence to Kitsault as applied for, in addition to relieving Kitsault of filing information requirements for gas export licence applications set out in Section 12 of the National Energy Board Act Part VI (Oil and Gas Regulations).

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