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GNL Québec Inc. Application for a Licence to Export Gas as Liquefied Natural Gas

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Letter Decision – Export Licence


GNL Québec Inc. (“GNL Québec”) applied to the NEB for a licence to export natural gas in the form of liquefied natural gas (“LNG”) and requested the following terms:

(a) 25 year term starting on the date of the first export;

(b) Maximum annual export quantity of 18.52 billion cubic metres;

(c) Maximum term export quantity of 458.34 billion cubic metres;

(d) A point of export at the outlet of the loading arm of the LNG facility to be located in the port of Saguenay, also called the port of Grande-Anse in La Baie, Québec, Canada; and

(e) An early expiry, or sunset clause, if exports have not commenced within 10 years of the issuance of the Export Licence.

(the “Export Licence”).

The NEB held that it would issue the Export Licence to GNL Québec, subject to the approval of the Governor-in-Council. The NEB determined that the quantity of gas to be exported would not exceed the reasonably foreseeable requirements for use in Canada having regard to trends in the discovery of gas in Canada. The NEB agreed with GNL Québec’s submissions in respect of the robust and integrated nature of natural gas markets in North America, noting that GNL Québec’s submissions were consistent with the NEB’s own market monitoring information.

While the NEB noted that the aggregate volume of LNG export licences granted to date represented a significant volume of LNG exports from Canada, it noted that many of the projects associated with the export licences face a very competitive market, and construction challenges. However, the NEB declined to speculate on which licences will be used or used to the full volume allowance, and noted that it determined each application on its own merits.

As part of the conditions of the Export Licence, the NEB approved a 15 percent annual tolerance, noting that the maximum term quantity of the licence is inclusive of the 15 percent tolerance amount. The NEB also accepted the request for a sunset clause of 10 years in length, noting it to be generally consistent with NEB practice.

The NEB issued the Export Licence to GNL Québec as requested, subject to approval of the Governor in Council, finding that the quantity of gas to be exported by GNL Québec would be surplus to Canadian needs.

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