Protesters won the opening skirmish, but still lost the firstbattle in a developing new war over expanding natural gas exportsbetween Canadian conservationists and energy consumers on theattacking side and the industry on the defense.

In the skirmish, ProGas Ltd. withdrew an application for aneight-year licence to deliver 4.2 Bcf (1.4 MMcf/d) to a potatoprocessing plant operated by RDO Foods Inc. in North Dakota.ProGas president Ken MacDonald confirmed that the action was takenafter 20 environmental and consumer groups from Ontario, BritishColumbia, Saskatchewan and Alberta lined up to fight the requestbefore the National Energy Board. The groups demanded full-scalepublic hearings rather than the “paper hearing” that the NEBinitially started in order to deal with the application as aroutine matter by exchanges of documents.

But the conclusion to the battle is that the sale to RDO will goahead anyway. Deliveries already go to the food plant in GrandForks under a much less elaborate procedure for short-term gasexport authorizations lasting two years or less — and ProGas willcontinue to use that method of fulfilling the contract, MacDonaldsaid.

The ProGas president said long-term licences continue to beattractive because they provide some security for lastingcommercial contracts. The protesters oppose additional longlicences for the same reason. The resistance partly arises fromenergy provisions of the North American Free Trade Agreement, whichstipulate that approvals cannot be rescinded once they haveauthorized long-term commitments of supplies to exportarrangements. Long exports can only be reduced if supplies run soshort that emergency rationing becomes necessary and affects allmarkets. The NEB also approved a routine request by ProGas for aneight-year extension of a long-standing blanket export licence toserve multiple U.S. markets. The decision included a five-foldincrease in authorized export volumes to 109 Bcf feet via theFoothills-Northern Border pipeline system.

In the RDO case, the protesters demanded a full-scale review ofthe expanding gas trade on two fronts: environmental effects ofaccelerating drilling and development, and the consequences forCanadian supplies and prices of allowing any new long-termcommitments to the United States. MacDonald said the RDO dealinvolved too small a volume of gas to deserve any suchenvironmental debate, and that it is also not big enough to justifythe expenses that would be involved in the wide-ranging, legal andregulatory debate over supplies that the protesters indicated theywanted to start.

But in the Canadian industry, the RDO case also stands as noticethat it can expect reviving, growing resistance against gas exportsas volumes continue to rise and integration of the U.S. andCanadian markets becomes steadily closer as a result of additionsto the pipeline grid. MacDonald predicted the next exporter thatseeks a new long-term licence can count on seeing at least as manyinterventions.

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