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Imperial Oil/ExxonMobil LNG Project Has Canadian License Extended to 40 Years

The Canadian crusade to break into global liquefied natural gas (LNG) markets was extended Thursday when a project sponsored by Imperial Oil and 70% owner ExxonMobil obtained a 15-year extension to its overseas sales hunting permit.

The National Energy Board (NEB) awarded the corporate pair the second 40-year export license made available by mid-2015 federal legislation, for their WCC LNG Ltd. proposal to build a mammoth terminal on the northern Pacific Coast of British Columbia.

The LNG Canada project, led by Shell Canada, received the first of the extended licenses for its proposed BC terminal at Kitimat earlier this year (see Daily GPI, Jan. 6). A 40-year permit is also sought by Malaysian state gas and oil conglomerate Petronas and its Calgary subsidiary, Progress Energy, for their project farther north at Prince Rupert.

WCC has not yet chosen a terminal location. The partners have extensive drilling rights holdings in northeastern British Columbia, where TransCanada Corp and Westcoast  Energy (Spectra) are courting customers for jumbo shale gas pipeline projects.

WCC has also been identified as a potential outlet for a revival of the Mackenzie Gas Project led by Imperial as senior partner supported by Shell, ConocoPhillips Canada, Exxon and native community investment in its proposed arctic pipeline. The dormant northern gas scheme recently obtained an extension of its construction approval into the 2020s.

In awarding 40-year export licenses, the NEB has accepted LNG project sponsors’ explanations that the lengthened permits help with competition for Asian customers that seek supply and regulatory security.

The WCC approval allows Imperial and its international corporate majority owner to develop an LNG export outlet for up to 64.2 Tcf of gas, shipped at a maximum rate exceeding 4 Bcf/d. The permit also grants time for market development, by remaining valid if the project starts making deliveries at any time within the next 10 years.

The ruling increases the total volumes of Canadian gas approved for LNG exports by 26 projects on the Pacific and Atlantic coasts to an astronomical 528 Tcf, flowing at a rate of 53 Bcf/d.

But the NEB, like the Canadian industry and provincial resource development authorities, expects sales competition to whittle down the rivalry to a small number of projects and a practical volume of tanker shipments. None have made it into construction yet.

The board’s WCC 40-year export license approval ruling observes, “All of these LNG ventures are competing for a limited global market and face numerous development and construction challenges.” Noting that Imperial and Exxon themselves foresee only a handful of Canadian successes overseas, the NEB said it did not believe all LNG export licences it issued will be used or used to the full allowance.

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