Licence to Export – LNG
On October 27, 2016, Woodfibre applied to the NEB pursuant to section 117 of the National Energy Board Act (the “NEB Act”) for a licence to export natural gas (the “Application”), in the form of liquified natural gas (“LNG”).
In the Application, Woodfibre requested:
(a) A 40-year Licence, starting on the date of first export;
(b) An early expiration clause where, unless otherwise authorized by the Board, the Licence will expire ten years after the date of Governor in Council (GIC) approval of the Licence, unless exports have commenced on or before that date;
(c) A maximum annual export quantity of 3.34 billion cubic metres (109m3) of natural gas, including a 15 per cent annual tolerance;
(d) A maximum quantity of 133.6 109m3 of natural gas over the term of the Licence;
(e) As a tolerance, the amount of LNG that may be exported in any consecutive twelve month period may exceed the annual volume by up to 15%. In addition, any unutilized portion of the annual volume of 2.9 109m3 in any year may be utilized in the subsequent 5 years; and
(f) The point of export of LNG from Canada shall be at the outlet of the loading arm of the LNG facility located near Squamish, British Columbia.
In considering the Application to export LNG under section 118 of the NEB Act, the NEB assessed whether the natural gas proposed to be exported exceeded the surplus remaining after allowance has been made for the reasonably foreseeable requirements for use in Canada.
The NEB noted that in determining Canada’s domestic requirements, it considers natural gas exports and imports effect on natural gas supply or natural gas demand.
The NEB also noted that in aggregate, the LNG export licence applications submitted to the NEB to date represented a significant volume of LNG exports from Canada. However, the NEB considered the fact that LNG ventures are competing for a limited global market and face numerous development and construction challenges. The NEB noted its belief that not all LNG export licences issued will be used to the full allowance.
NEB Decision to Issue Licence
The NEB determined that the quantity of natural gas proposed to be exported by Woodfibre, for a term of 40 years, is surplus to Canadian needs. The NEB found that the natural gas resource base in Canada, as well as North America overall, is large and can accommodate reasonably foreseeable Canadian demand, including the exports proposed in the Application, and a plausible potential increase in demand.
The NEB decided to issue a 40-year Licence to Woodfibre, subject to Governor in Council approval, to export natural gas subject to the terms and conditions, included as an appendix to the decision.
