Licence to Export and Import Natural Gas
Bear Head LNG Corporation (“Bear Head”) and Pieridae Energy (Canada) Ltd. (“Pieridae”) each separately applied to the NEB for:
(a) A licence to export natural gas in the form of liquefied natural gas (“LNG”); (“Export Licence”) and
(b) A licence to import natural gas. (“Import Licence”).
Bear Head requested the following terms for its Export Licence:
(a) 25 year term starting on the date of the first export;
(b) Maximum annual export quantity of 19.4 billion cubic metres;
(c) Maximum term export quantity of 453 billion cubic metres;
(d) A point of export at the outlet of the loading arm of the LNG facility to be located in Richmond County near Point Tupper, Nova Scotia; and
(e) An early expiry if exports have not commenced within 10 years of the issuance of the Export Licence.
Bear Head requested the following terms for its Import Licence:
(a) 25 year term starting on the date of the first import;
(b) Maximum annual import quantity of 14.2 billion cubic metres;
(c) Maximum term import quantity of 356 billion cubic metres;
(d) A point of import at which the Maritimes & Northeast Pipeline crosses the Canada-United States border near St. Stephen, New Brunswick or as otherwise directed by the NEB; and
(e) An early expiry if imports have not commenced within 10 years of the issuance of the Import Licence.
Pieridae requested the following terms for its Export Licence:
(a) 20 year term starting on the date of the first export;
(b) Maximum annual export quantity of 16.675 billion cubic metres;
(c) Maximum term export quantity of 333.5 billion cubic metres;
(d) A point of export at the outlet of the loading arm of the LNG facility to be located in the vicinity of Goldboro, Nova Scotia, and highway and railway crossings along the international border between the province of New Brunswick and the state of Maine; and
(e) An early expiry if exports have not commenced within 10 years of the issuance of the Export Licence.
Pieridae requested the following terms for its Import Licence:
(a) 20 year term starting on the date of the first import;
(b) Maximum annual import quantity of 11.845 billion cubic metres;
(c) Maximum term import quantity of 236.9 billion cubic metres;
(d) A point of import at which the Maritimes & Northeast Pipeline crosses the Canada-United States border near St. Stephen, New Brunswick; and
(e) An early expiry if imports have not commenced within 10 years of the issuance of the Import Licence.
Bear Head and Pieridae both submitted that the quantity of LNG proposed for export would not exceed the surplus remaining after allowance for foreseeable consumption in Canada. Bear Head provided three reports forecasting Canadian consumption, long term gas supply and demand forecasts, and an outlook of Canadian LNG exports. Each of Bear Head’s and Pieridae’s reports noted that Canada’s gas markets were open and liquid, supplied by a robust resource base, and with increased imports from the lower 48 states. Bear Head included nearly all of the NEB approved exports in its forecasts, up to 18 Bcf/d, despite Pieridae’s and Bear Head’s submission that the full approved LNG export volumes would likely not all materialize. Bear Head and Pieridae noted that the likely range of exports would be far closer to the low end of its forecasts than the full amount.
The NEB was satisfied that the resource base in Canada was sufficiently large to accommodate the reasonably foreseeable Canadian demand, as well as the LNG exports proposed by each of Bear Head and Pieridae. The NEB noted that the evidence provided by Pieridae and Bear Head was generally consistent with the NEB’s own market monitoring information. The NEB agreed with Pieridae and Bear Head that not all LNG export licences issued by the NEB will be used to their full extent. On this basis, the NEB found that each of Bear Head and Pieridae’s projections were reasonable, and that there would be sufficient resources to meet Canadian demand plus the forecasted level of LNG exports.
A number of parties submitted letters of comment concerning the development of infrastructure in Nova Scotia, and utilization factors on existing facilities.
However, the NEB determined that such considerations were outside the scope of the NEB’s jurisdiction on natural gas export licence applications, and declined to consider the issues.
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, noting it to be generally consistent with NEB practice.
The NEB approved the requested points of import export of LNG for both Bear Head and Pieridae.
The NEB issued the Export Licences and the Import Licences to Bear Head and Pieridae as requested, subject to approval of the Governor in Council, having found that the quantity of gas to be exported by Bear Head and Pieridae would be surplus to Canadian needs.
