Export Licence – LNG
The NEB released its decision in respect of Quicksilver Resources Canada Inc.’s (“Quicksilver”) application pursuant to section 117 of the National Energy Board Act for a licence to export liquefied natural gas (“LNG”) for a period of 25 years, starting on the first date of export, at a point located on the north side of Campbell River, British Columbia at the outlet of the loading arm of the proposed LNG terminal.
Quicksilver applied for an export volume of 20 million tonnes, equivalent to 960 billion cubic feet, or 27 billion cubic metres annually. The maximum quantity of the licence would be for 25,875 Bcf, or 733 billion cubic metres.
Quicksilver submitted that the quantity of LNG proposed for export would not exceed the surplus remaining after allowance for foreseeable consumption in Canada. Quicksilver provided three reports forecasting Canadian consumption, long term gas supply and demand forecasts, and an outlook of Canadian LNG exports. Quicksilver’s reports noted that Canada’s gas markets were open and liquid, as well as supplied by a robust resource base. Quicksilver included nearly all of the NEB approved exports in its forecasts, up to 18 Bcf/d, despite Quicksilver’s submission that the full approved LNG export volumes would be unlikely to materialize.
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 Quicksilver. The NEB also noted that the evidence provided by Quicksilver was generally consistent with the NEB’s own market monitoring information, and further agreed with Quicksilver that not all LNG export licences issued by the NEB would be used to their full extent. On this basis, the NEB found that Quicksilver’s projections were reasonable, and that there would be sufficient resources to meet Canadian demand plus the forecasted level of LNG exports.
Quicksilver requested an annual 15 percent tolerance to the amount of LNG exported in a given 12-month period, and also requested a sunset clause whereby the licence would expire ten years from the date of issuance if exports have not commenced on or before that date.
The NEB approved the requested 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 point of export of LNG at the outlet of the loading arm of a proposed LNG terminal located on the north side of Campbell River, British Columbia.
The NEB issued the licence to Quicksilver, subject to approval of the Governor in Council, having found that the quantity of gas to be exported by Quicksilver would be surplus to Canadian needs.
