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Imperial-ExxonMobil LNG Project Seeks 40-Year Canadian Export License

Canadian producers remain far from dropping out of competition for overseas sales of liquefied natural gas (LNG), as evidenced by a move by Imperial Oil and its majority owner -- ExxonMobil Corp.

The corporate pair's WCC LNG terminal project stepped forward to seek Canada's third 40-year gas export license since federal legislation extended the maximum term beyond a longstanding traditional limit of 25 years in mid-2015 (see Daily GPISept. 18, 2015).

The rules also enhance flexibility by adding sunset clauses that keep the licenses valid for 10 years of courting overseas customers, planning, completing regulatory approvals and construction before the export delivery clock starts running. In effect, Canadian LNG schemes have half century-long official lifespans.

The WCC pair's step to stay in the LNG arena follows swift approval by the National Energy Board (NEB) of a 40-year license for the international LNG Canada consortium led by Shell. The all-Asian entry, Pacific NorthWest, is also seeking an extended permit.

Rivalry for overseas gas sales is not solely about pricing because security of supply is a high priority among customers and ability to make long commitments gives Canadian LNG an advantage, WCC said in its extended license application.

"WCC has determined that a 40-year export license, in addition to improving regulatory certainty, could help strengthen the global competitiveness of WCC's contemplated project," the application said.

Potential overseas customers are being offered access to a supply warehouse that is solely under the WCC sponsors' control, to be developed for up to six LNG production trains built on a schedule crafted to match market conditions.

The super-long export license would allow overseas tanker cargoes to grow to 4 Bcf/d. ExxonMobil and its 70% owned Canadian arm, Imperial, own 2,258 square miles of shale and tight-gas drilling targets in prolific British Columbia, Alberta and Northwest Territories geological formations including the Montney, Horn River, Duvernay and central Mackenzie Valley deposits.

Imperial and ExxonMobil are also holding out for the most competitive project formula that can be devised within the Canadian gas industry.

Unlike its rivals, the WCC pair has not yet decided on a location for their proposed terminal on the Pacific coast of BC. Instead, Imperial and ExxonMobil are collecting site offers from Kitimat and Prince Rupert and delivery service proposals.

The commercial talks on transporting gas from the northern shale deposits to the ports are strictly confidential. But TransCanada Corp., Nova Gas Transmission Ltd. and Spectra Energy Transmission (WestCoast) are well known to be advancing rival plans. The options, currently moving through federal and provincial regulatory screens, include three jumbo pipelines across about 800 kilometers (500 miles) of BC wilderness.

"Several possible pipeline options are being considered to deliver gas to the LNG terminal, including existing systems, expansions, new third-party systems, and new proprietary systems," according to the new application for an extended export license. "The [WCC] project proponents have entered into confidentiality agreements with several pipeline companies relating to services for delivery of gas to the LNG terminal."

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