Oil and Gas
Application
In this decision, the CER issued a 25-year licence to export butane to AltaGas LPG Limited Partnership (“AltaGas”) pursuant to s. 344 of the Canadian Energy Regulator Act (“CER Act”).
Decision
The CER recognized that not all of the filing requirements contained in s. 20 of the Part VI Regulations are relevant to its assessment of AltaGas’ application. The CER exempted AltaGas from filing requirements pertaining to details of supply contracts and resources, export contracts, transportation contracts, potential environmental effects, and specific governmental approvals, as these were not relevant.
Applicable Legislation
Canadian Energy Regulator Act, SC 2019, c 28, s 10 – s 344.
National Energy Board Act Part VI (Oil and Gas) Regulations, s 20.
Pertinent Issues
AltaGas LPG General Partner Inc., on behalf of AltaGas, applied to the CER under s. 244 of the CER Act for:
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a 25-year licence to export butane, starting on the date of first export;
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a maximum annual export quantity of 2,669,391 cubic meters (m3) or 16,790,000 barrels (“bbls”), including a 15% annual tolerance;
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a maximum quantity of 66,734,775 m3 or 419,750,000 bbls of butane over the term of the licence;
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the points of export of butane from several locations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, New Brunswick; and
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an “early expiration clause” where, unless otherwise directed by the CER, the term of the licence ends 10 years after the date of issuance of the licence if the export of butane has not commenced on or before that date.
AltaGas submitted that, as required under s. 345 of the CER Act, the quantity of butane it sought to export does not exceed the surplus remaining after due allowance has been made for the reasonably foreseeable requirements for use in Canada (the “Surplus Criterion”).
AltaGas submitted two reports in support of its application. Both reports acknowledged some challenges in forecasting butane supply. The Goobie Tulk Inc. Report notes that recoverable resources of butane are not typically estimated because if natural gas is not processed for natural gas liquids (“NGL”) recovery.
Although the butane market is not as large, liquid, or transparent as the North American natural gas or propane markets, the CER determined that there is a market-oriented regulatory framework in both the U.S. and Canada that allows butane prices to be settled by market forces. Additionally, there is a surplus of butane in North America, with the majority of surplus butane in the U.S., exported to overseas markets, and the majority of surplus Canadian butane exported to the U.S. with small volumes delivered to international markets via the U.S. or via AltaGas’ Ridley Island Terminal in Prince Rupert, B.C.
The CER, therefore, found that the current and forecasted Canadian butane demand and Canadian butane requirements will be met over the term of the Licence. The Surplus Criterion was therefore satisfied.
