Canada approves two more LNG export licenses

Canada's National Energy Board has approved export licenses for two more proposed LNG projects in British Columbia (BC).

AltaGas DCLNG was authorized to export up to a gas equivalent of 1 Bcf/d (28mn m³/d) for 25 years and Kitsault Energy up to 23mn t/yr, equivalent to 3 Bcf/d of gas, for 20 years. Both approvals must be finalized by the Canadian executive branch, which typically endorses NEB decisions.

Canada has now approved 28 LNG export licenses totaling 406mn t/yr, more than current global trade of about 250mn t/yr. No Canadian project has made a final investment decision (FID) because of competition from cheaper US projects and falling oil prices. Most long-term LNG contracts to Asia are linked to oil prices.

AltaGas DCLNG is a venture of Canadian utility AltaGas, Japanese energy company Idemitsu, Belgian shipper Exmar and France's EDF Trading.

AltaGas DCLNG would comprise up to five liquefaction vessels moored in the Douglas Channel, about 5 miles (8km) from Kitimat, BC, with combined capacity equivalent to 1 Bcf/d of gas.

A customs duty dispute between AltaGas DCLNG and federal regulators could push back an FID on the project to at least 2017, AltaGas has said. The utility previously planned to make an FID in late 2015 on a $600mn first phase that would have come on line in 2018 with capacity of 110mn cf/d.

The Canada Border Services Agency (CBSA) in the third quarter of 2015 told AltaGas it would have to pay a 25pc import duty on its planned liquefaction vessel, since it would be made in China. The vessel has an estimated cost of about $300mn.

AltaGas appealed the ruling and previously said it expected a decision in late November 2015. The CBSA said it does not comment on specific customs disputes.

AltaGas DCLNG could start exporting small volumes by using the existing Pacific Northern Gas (PNG) pipeline, which is owned by AltaGas, to bring feed gas hundreds of miles from the western Canadian sedimentary basin.

Kitsault Energy would be located about 500 miles northwest of Vancouver and 85 miles northwest of Prince Rupert. The NEB license would cover baseload capacity of 20mn t/yr and a 15pc tolerance to allow for the export of additional production.

The project, which would use up to four liquefaction vessels, was originally scheduled to come on line in 2018. Kitsault president Krishnan Suthanthiran told Argus todayhe would not be able to provide an immediate update on whether the timeline has changed.

Suthanthiran is a US-based entrepreneur who bought the abandoned mining town of Kitsault in 2005 with the goal of opening an eco-resort or retreat there. He said in August 2013 that he had reached a preliminary agreement to partner with a major Asian oil and gas company for the LNG project, but did not identify the company.

Kitsault could cost as much as $24bn at full buildout, including a $5bn feed gas pipeline, Suthanthiran has said.