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Proposed Canada LNG Export Volumes at 137 Tcf

The total volume of Canadian reserves earmarked for liquefied natural gas (LNG) sales to Asia from the northern Pacific coast of British Columbia (BC) has hit an astronomical 137 Tcf, according to the National Energy Board (NEB).

The 137 Tcf earmarked for Asia Pacific sales by the six projects that have gone before the NEB is nearly double the current, combined total of remaining established gas reserves in BC and Alberta: 71 Tcf.

The roster of projects putting numbers on their ambitions grew to six when Pacific Northwest LNG Ltd. applied to the National Energy Board (NEB) for a license to export 24.5 Tcf over 25 years (see NGI, July 8). Like the rest of the lineup, the latest entry identifies its primary supply source as largely untapped shale gas deposits in northeastern B.C. and northwestern Alberta. Asian interests in international exploration and development drive the scheme.

Pacific Northwest is 90% controlled by Progress Energy and its owner, Malaysian state-owned Petroliam Nasional Berhad (Petronas), supported by Japan Petroleum Exploration Co. (Japex) as a 10% partner. Like the rest of the BC lineup, Pacific Northwest makes no claim to have landed overseas LNG sales contracts, does not name potential customers or specify volumes aimed by its export strategy at any particular Asian destination countries.

Proposed LNG export schemes that have filed for NEB licenses are KM LNG, BC LNG, LNG Canada, Prince Rupert LNG, WCC LNG and Pacific NW LNG (see chart).

Another three LNG projects have declared intentions to obtain NEB export licenses and build BC terminals but have not yet put numbers on their hopes by entering the regulatory process: Nexen Inpex LNG, Kitisault Energy LNG and AltaGas Idemitsu Joint Venture.

The board has granted licenses to KM LNG, BC LNG and LNG Canada. Approvals have been swift to date, especially since a 2012 overhaul of procedures eliminated environmental assessments on grounds that they will be conducted in reviews by federal and provincial authorities of separate terminal and pipeline construction applications.

The NEB's founding legislation continues to stipulate that long export commitments can only be approved if the board is satisfied that they are surplus to foreseeable Canadian needs. In awarding export licenses to date, the NEB accepted assurances that LNG terminal sponsors' spreads of drilling rights to BC and Alberta unconventional gas deposits more than cover reserves requirements over the full lifespans of their projects.

The NEB, Alberta Energy Regulator (formerly the Energy Resources Conservation Board) and BC Oil and Gas Commission are collaborating on making a realistic assessment of western Canadian shale productive potential. The first report, originally promised for this spring but not yet released, focuses on the most geographically and economically accessible deposit: the Montney Shale, which covers a wide swath of northern BC and Alberta and harbors rich sources of premium-value petroleum liquids.

The biggest deposit, the Horn River Basin near the top boundary of BC with the Yukon and Northwest Territories, is rated as larger than the Montney by geological assessments of total, ultimate resource potential. But Horn River exploration to date has found only dry gas and connecting the area to proposed Pacific Coast terminal sites requires new pipeline construction across about 500 miles of northern wilderness forests, muskeg swamps and mountains.

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