National Energy Board Releases Decision on Export of Liquefied Natural Gas
On April 16, 2014, the National Energy Board (NEB or the Board) issued a license to Triton LNG Inc. on behalf of Triton LNG Limited Partnership (Triton LNG LP), to export liquefied natural gas (LNG) (Letter Decision). The licence will permit Triton to export up to 3,749,000 103m3 annually.
Before considering the merits of Triton’s application, the Letter Decision begins with the following noteworthy statement by the NEB regarding government policy and an acknowledgement of the importance of access to new markets:
Recent developments in gas production technology have resulted in a significant increase in the Canada gas resource base and North American gas supply. One of the major impacts of this increase is lower demand for Canadian gas in traditional gas markets in the United States and eastern Canada. As a result, the Canadian gas industry is seeking to develop access to overseas gas markets.
The Letter Decision is also noteworthy for the following reasons:
- The NEB issued the export license to Triton LNG Inc., noting that while Triton provided one example where a license was issued to partnership under Canadian law, it preferred to follows its established practice for Canadian partnerships, and issue the license to the general partner on behalf of the limited partnership. This is a change from the Board’s previous decisions to issue export licenses to partnerships, including the KM LNG Operating General Partnership (a British Columbia partnership), as well as several United States partnerships.
- The Board signaled that it is moving away from granting reporting exemptions. In its application, Triton requested an exemption from the reporting requirements set out in section 4 of the National Energy Board Export and Import Reporting Regulations (Reporting Regulations). Specifically, Triton requested that its reporting requirements be limited to quarterly reporting, as opposed to monthly reporting, stating that monthly reporting would place it at a competitive disadvantage. The Board denied this request and relied upon reasoning that its enhanced market monitoring relies on the information that is required to be submitted by export authorization holders in compliance with the Reporting Regulations. The Board reiterated that it continues to support market transparency, but will exercise its discretion with respect to the information it chooses to release to the public.
- In articulating the policy of the federal government, the Board acknowledged industry’s efforts to develop access to overseas markets and emphasized that the gas resource base in Canada is large and can accommodate reasonably foreseeable Canadian demand, the proposed LNG exports and a plausible potential increase in demand.
This Letter Decision is another example of the trend we continue to see from the NEB. This trend involves timely decisions and demonstrates that the NEB views its role as implementing the government policy that Canada is amenable and desirous of expanding energy trade with new markets and jurisdictions. This trend is positive news for foreign entities seeking to do business and invest in Canada.
gas production Letter Decision liquefied natural gas LNG National Energy Board NEB Triton LNG Inc.