Export Licence – LNG
Stolt LNGaz Inc. (“Stolt”) applied to the NEB pursuant to section 117 of the National Energy Board Act (the “NEB Act”), for a licence to export gas in the form of liquefied natural gas (“LNG”). Stolt sought the following terms in its LNG export licence application:
(a) A 25 year licence term starting on the date of first export;
(b) An included 15 percent annual tolerance, and a maximum annual export quantity of 0.835 billion cubic meters or 29.47 billion cubic feet (Bcf);
(c) A maximum term quantity of 20.875 billion cubic meters or 736.75 Bcf over the term of the licence;
(d) A point of export located at the outlet of the loading arm of the proposed natural gas liquefaction terminal to be located in the vicinity of Bécancour, Québec; and
(e) An early expiration clause whereby the licence would expire ten years from the date of approval by the Governor in Council issuing the licence if exports have not commenced (the “Application”).
Stolt submitted that the quantity of LNG it sought to export did not exceed the surplus remaining after due allowance has been made for the reasonably foreseeable requirements for use in Canada, as required by section 118 of the NEB Act. Stolt, in support of its application, filed two reports which it submitted demonstrated that the Canadian resource base remains large enough to meet Canadian gas needs and remains robust. Stolt also submitted that there has been a major increase in estimates of Canada’s tight gas and shale gas resources recently, and that it was reasonable to extrapolate such an outlook into the future based on technological advancements in drilling and completion techniques.
Stolt stated that the North American gas market was highly liquid, open, efficient, integrated and was responsive to changes in supply and demand. Stolt noted that a 20 percent increase to Canadian demand for natural gas would not negatively affect domestic supplies or proposed export volumes.
The NEB approved the Application subject to the approval of the Governor in Council, on the terms proposed by Stolt. The NEB determined that the volume of LNG that Stolt proposed to export did not exceed the surplus remaining, after due allowance had been made for the reasonably foreseeable requirements for use in Canada, having regard to trends in the discovery of gas in Canada. The NEB noted that the evidence in the Application was generally consistent with the market monitoring information maintained by the NEB itself.
While the NEB noted that while the aggregate volume of LNG licences granted recently represent a significant volume for export from Canada, the proposed LNG ventures were each competing for a limited global market and face numerous challenges. Accordingly, the NEB found that Stolt’s LNG export assumptions, whereby not all LNG volumes for export would materialize, was reasonable.
