The National Energy Board (NEB) has recently approved liquified
natural gas (LNG) export licences to three companies with competing
projects in Atlantic Canada –
Pieridae Energy (Canada) Ltd in Nova Scotia,
Bear Head LNG Corporation in Nova Scotia, and
Saint John LNG Development Canada Ltd in New Brunswick. The
export licences are an early step towards allowing these entities
to develop LNG export facilities. If placed into operation, each of
the LNG export facilities would provide natural gas producers in
Canada and the United States with access to overseas markets. If
all of these LNG export projects were to proceed as approved, they
could support an annual export of as much as 44 billion cubic
metres for 20 to 25 years.
The key factor that the NEB considered in issuing the three
export licences was whether there is expected to be surplus natural
gas supply in Canada to support each licence. The NEB agreed that
the North American gas market will continue to meet Canada's
needs, and that surplus supply is expected to be available to
support each of the projects on a stand-alone basis. In order to
support supply for these projects (which may require more than
domestic supply), the NEB also approved import licences to permit
the operators to import substantial quantities of natural gas from
the United States on the Maritimes & Northeast Pipeline.
The NEB has approved licences for the exportation of LNG in the
past, but the approval of three competing licences in quick
succession in the same region has attracted attention (see, for
example, news articles
here). What is important to keep in mind is that the licencing
process is a pre-condition – but not a guarantee – of
an LNG exporting operation. There are many technical and financial
challenges which must be overcome to make exportation a viable
business option. There is a huge cost associated with developing an
LNG export facility, and it is highly unlikely that all of the
recently approved projects will actually proceed. The NEB
recognized this reality in the decisions that it issued, stating
that while the LNG export licence applications in aggregate
represent a significant export volume, the projects are all
competing for a limited global market and face numerous development
and construction challenges. In the result, the NEB indicated that
it cannot predict which of the issued export licences will actually
* Co-authored by Michael McDonald, an articling student at Aird & Berlis LLP.
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Canada is a constitutional monarchy, a parliamentary democracy and a federation comprised of ten provinces and three territories. Canada's judiciary is independent of the legislative and executive branches of Government.
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