Canada: NEB Releases BC LNG Export Licence Decision

Copyright 2012, Blake, Cassels & Graydon LLP

Originally published in Blakes Bulletin on Energy–Regulatory/Environmental, February 2012

On February 2, 2012, the National Energy Board (NEB) granted a 20-year licence to BC LNG Export Co‑operative LLC (BC LNG) to export liquefied natural gas (LNG) from Canada to markets in the Pacific Rim.

Although opposition to the application was virtually non-existent and relatively small volumes of LNG were at play, this decision, made on the heels of the NEB's approval of LNG exports from Kitimat, British Columbia in October 2011, demonstrates a continued willingness by the NEB to consider export markets for Canadian LNG beyond the U.S.

BC LNG applied for a licence term of 20 years and a maximum annual volume of 1.8 million tonnes of LNG, which is approximately equivalent to 2.4 billion m3 or 84.5 billion cubic feet (bcf). This amounts to approximately 1.7 trillion cubic feet (tcf) over the 20-year licence term.

The proposed but not-yet-approved LNG facility to be located near Kitimat, B.C. is comprised of two barge-based liquefaction trains to be constructed in stages. Natural gas feedstock for the first train will be transported via pipeline to the facility. From there, tankers will follow established shipping lanes to transport LNG to markets located primarily in Asia.

As one of the first applicants seeking a licence to export LNG under the current regulations for the purposes of accessing offshore markets, BC LNG was presented with the challenge of fulfilling the NEB's mandated application requirements which do not contemplate offshore LNG exports.

This cleavage between the NEB-mandated application requirements and the realities of offshore LNG exports can render certain regulatory requirements unanswerable or, arguably, not relevant or inapplicable. Accordingly, BC LNG applied for and was granted exemptions from certain of the application requirements. As it has previously stated, the NEB acknowledged that not all application requirements are relevant in the context of LNG export licence applications.

The proceeding was undertaken by way of written hearing with significant support and little to no opposition from intervenors.

The NEB released its decision on February 2, 2012. In an export licence decision, the NEB assesses the merits of the application through a surplus determination procedure known as the Market-Based Procedure, designed to establish whether the proposed export is both a) surplus to reasonably foreseeable Canadian requirements having regard to trends in the discovery of gas in Canada and b) is in the public interest.

Acknowledging that BC LNG had no LNG sales contracts at this time, the NEB's decision was founded in part on the most general of export market information provided by BC LNG. The NEB accepted the BC LNG submission that, due to the size of Canada's natural gas resource, the proximity to Asian markets and a stable political and regulatory environment, Canada is viewed as a desirable source of supply for Asian LNG purchasers.

The NEB was also satisfied that, having regard to the trends in the discovery of gas in Canada, the quantity of gas to be exported did not exceed the surplus remaining after due allowance has been made for the reasonably foreseeable requirements for use in Canada.

The NEB was also satisfied that there was adequate supply to support the export volume over the term of the licence. The NEB noted that parties were "contractually bound" to provide the applied-for export volume over the 20-year term and found that the size of the producer-controlled resource and the producer's expected daily and annual productive capacity exceeded the requirements for the applied-for export licence.

Regarding transportation, the NEB found that BC LNG was sufficiently incentivized to ensure that additional pipeline capacity to the facility would be acquired so as to fully utilize the requested export volumes. The NEB noted that BC LNG's option to acquire capacity on the Pacific Northern Gas system was sufficient to supply the first train of the facility and that additional pipeline transportation capacity was being negotiated with the proponents of Pacific Trail Pipeline, among others.

The NEB concluded that the intent and objectives of the Complaints Procedure had been satisfied. The NEB found that BC LNG had provided natural gas market participants with a reasonable level of information about its proposed exports and that the Hearing Order was sufficiently publicized. The NEB noted that no parties came before it to complain that they did not have an opportunity to purchase natural gas on terms and conditions, including price, similar to those of the export proposal.

The NEB acknowledged that the application for a natural gas export licence does not trigger an environmental assessment under the Canadian Environmental Assessment Act; however, the NEB stated that it was not precluded from considering potential environmental effects and directly related social effects of gas exports when assessing the application. Regardless, the NEB declined its own invitation to undertake analysis on this point.

The NEB found that the potential environmental effects and directly related social effects would be considered either through the environmental assessment of the terminal or through Transport Canada's TERMPOL Review Process. The NEB further noted that other agencies, federal and provincial, will continue to assess any environmental and social effects associated with these aspects of BC LNG's export proposal.

The NEB found that duplicating the work of these other agencies was not warranted. Considering that, in the context of an export licence application, the assessment regarding environmental and social effects will either be completed prior to, or assessed subsequent to, the granting of the export licence, the specific factors that would be considered under this criterion in an export licence application remain in question.

The NEB decided to issue a licence to export liquefied natural gas to BC LNG, subject to the approval of the Governor in Council. The licence is conditional on export commencement on or before March 31, 2016 and will terminate on that date if exports do not commence by that time.

Although this decision may not serve as an accurate blueprint for larger LNG projects and export licence applications, it does support the view that the NEB is open to offshore LNG exports, recognizes that many of its prescribed application filing requirements are not strictly relevant or can be addressed through other means, and is willing to adjust its process accordingly.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
27 Oct 2016, Seminar, Toronto, Canada

Please join members of the Blakes Commercial Real Estate group as they discuss five key provisions of a commercial real estate purchase agreement that are often the subject of much negotiation but are sometimes misunderstood.

1 Nov 2016, Seminar, Toronto, Canada

What is the emotional culture of your organization?

Every organization and workplace has an emotional culture that can have an impact on everything from employee performance to customer or client satisfaction.

3 Nov 2016, Seminar, Toronto, Canada

Join leading lawyers from the Blakes Pensions, Benefits & Executive Compensation group as they discuss recent updates and legal developments in pension and employee benefits law as well as strategies to identify and minimize common risks.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.