NGI The Weekly Gas Market Report / NGI All News Access

NEB to Fast-Track Natural Gas, Oil Projects

Canadian environmental assessments and public hearings will no longer be required by the National Energy Board (NEB) for long-term natural gas, byproducts and oil export and import licenses. The NEB announced the time-saving change as a step to carry out regulatory reform legislation enacted as of June 29 by the year-old Conservative majority government following prolonged, heated debate in Parliament this spring.

The measure grew out of a Conservative commitment to eliminate duplication of provincial responsibilities and approval procedures for industrial projects (see NGI, May 14). The regime's declared intentions were summed up by the pro-development title of the reform bill: The Jobs, Growth and Long-Term Prosperity Act. When energy trade leads to new supply development with drilling and facilities construction, the projects are mostly under provincial jurisdiction and often generate environmental assessments, resistance and hearings.

Alberta, the mainstay gas- and oil-producing province, pledged to introduce regulatory efficiency reform legislation this fall as a plank in its spring reelection platform. If enacted as promised the change will combine currently separate environmental and economic authorities into a single regulator, likely an enlarged version of the province's 74-year-old Energy Resources Conservation Board (ERCB). Elimination of mandatory environmental assessments and hearings from Canadian national energy trade licensing will be finally confirmed following a public comment period, the NEB said.

The board also made a commitment to review its 25-year-old market-based procedure for assessing economic aspects -- chiefly domestic Canadian supply and demand -- of applications for long-term export and import licenses. For now, the key rules are a prohibition against licensing exports of more supplies than the country is known to have, and a right for Canadian consumers to bid for volumes that producers want to put on international markets.

The changes affect only a small minority of Canadian and American gas, byproducts and oil that flows on the “continental” fossil fuels market, chiefly as imports into the United States. More than 90% of the trade takes place under short-term licenses for contracts lasting less than two years. NEB applications and approvals of short trade arrangements are typically three-page documents that identify the permit holders and time periods involved.

Last winter the NEB granted the first new long-term export permits that the industry has sought in about two decades. These were licenses to seek overseas contracts for sponsors of two liquefied natural gas (LNG) terminals proposed on the Pacific coast of northern British Columbia (see Daily GPI, Feb. 6; Oct. 17, 2011). More LNG projects, including pipelines as well as tanker terminals, are on Canadian industry drawing boards, with sponsors hoping to break into higher-priced Asian gas markets with supplies available from shale deposits in northeastern British Columbia (BC), northern Alberta and potentially the southern Northwest Territories.

The NEB also moved to implement timing aspects of the national regulatory reform law by setting case completion targets for current project applications. The new legislation sets a 15-month deadline for decisions on most major development schemes, led by pipelines. But the official targets remain flexible because the rules allow for time-outs, stopping the clock when the NEB requests additional technical reports, for instance.

The first test case for the new regime is a NEB review of an application by Enbridge Inc. to reverse an oil pipeline across southern Ontario so that it will deliver eastbound supplies from Alberta and the western United States rather than westbound imports from the North Sea.

Environmentalists are resisting the pipeline reversal, saying it is a thinly disguised version of a suspended proposal for eastbound exports of Alberta oilsands production. The dormant Enbridge scheme, which was shelved after failing to obtain Alberta support, potentially included a spur line to a major oil terminal on the Atlantic coast in Portland, ME.

While the 15-month deadline for a decision is expected to fan the environmental heat under the case, the biggest political fight could erupt over a different aspect of the regulatory changes. The national reform bill tightens up Canadian rules on "standing" or rights to intervene in cases to a standard followed by law courts and provincial regulatory agencies such as the ERCB.

Under the new regime, protesters can only be heard -- and obtain coverage of costs -- if they show they are affected by projects rather than just have opinions. The more tolerant older system has allowed a "mob-the-mike" strategy to evolve before national regulatory panels. Thousands of environmental protesters, enlisted by Canadian and U.S. conservation nongovernmental organizations, are currently stepping up to microphones to make repetitive 10-minute speeches during marathon hearings on Enbridge's Northern Gateway proposal for a pipeline from Alberta's oilsands to a new export terminal on the BC coast.

©Copyright 2012 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Comments powered by Disqus