DOE authorizes export of U.S. gas to Canada, for re-export by Bear Head LNG

The U.S. Department of Energy on Feb. 5 partially granted a February 2015 application from Bear Head LNG Corp. and Bear Head LNG (USA) LLC for long-term, multi-contract authorization to export natural gas from the United States to Canada and, after liquefaction in Canada, to re-export the U.S.-sourced natural gas in the form of liquefied natural gas (LNG) to other countries.

This application covered a combined total volume equivalent to 440 billion cubic feet per year (Bcf/yr) of natural gas, or 1.2 Bcf per day (Bcf/d). Bear Head LNG states that the natural gas will be exported to Canada at the United States-Canada border near Calais, Maine, and St. Stephen, New Brunswick, respectively, on the Maritimes & Northeast (M&N) Pipeline.

Bear Head LNG sought to export this volume of natural gas for the following purposes:

  • To use approximately 42.4 Bcf/yr as feedstock in a proposed Canadian natural gas liquefaction facility called the Bear Head LNG export terminal, currently being developed by Bear Head LNG within the Point Tupper/Bear Head Industrial Park near the town of Port Hawkesbury, on the Strait of Canso, in Richmond County, Cape Breton, Nova Scotia, Canada;
  • To use approximately 397.6 Bcf/yr of natural gas (1.1 Bcf/d)—the equivalent of eight million metric tons per annum (mtpa) of LNG—as feedstock in the Bear Head Project, where the U.S.-sourced natural gas will be liquefied, then re-exported in the form of LNG by vessel from Nova Scotia, Canada, to: any country with which the United States has, or in the future enters into, a free trade agreement (FTA) requiring national treatment for trade in natural gas (FTA countries); and any other country with which trade is not prohibited by U.S. law or policy (non-FTA countries).

The Bear Head Project will have four LNG trains, each with a nominal LNG production capacity of two mtpa of LNG, providing an initial total LNG production capacity of 8 mtpa of LNG.

In July 2015, DOE’s Office of Fossil Energy granted the portion of Bear Head LNG’s application requesting long-term authority to export U.S.-sourced natural gas to Canada and to other FTA countries. Under the terms of that FTA order, Bear Head LNG is authorized to export natural gas to Canada by pipeline for end use in Canada, and to re-export the U.S. sourced natural gas, after liquefaction in Canada, to other FTA countries for end use in FTA countries, in a total combined volume of 440 Bcf/yr of natural gas (the same volume requested in the non-FTA portion of the application).

Said the Feb. 5 DOE order: “In this Order, we review the portion of the Application requesting long-term authorization to export U.S.-sourced natural gas by pipeline to Canada for liquefaction and re-export in the form of LNG from Canada to non-FTA countries…. Bear Head LNG requests this export authorization for a 25-year term to commence on the earlier of the date of first export or 10 years from the date the authorization is granted (February 5, 2026). Bear Head LNG also requests this authorization on its own behalf and as agent for other entities that will hold title to the LNG at the time of export (or re-export).

“For the reasons discussed below, this Opinion and Order grants Bear Head LNG’s Application in a modified volume up to the equivalent of 296 Bcf/yr of natural gas (0.81 Bcf/d)—the existing capacity of the M&N US Pipeline at the cross-border facilities. This volume is less than the total export volume requested by Bear Head LNG (440 Bcf/yr, or 1.2 Bcf/d), but there is no basis for DOE/FE to authorize exports of natural gas (or re-exports of U.S.-sourced gas in the form of LNG) in a volume greater than the M&N US Pipeline’s existing capacity, nor have the environmental impacts of expanding the M&N US Pipeline been studied as would be required by [the National Environmental Policy Act]. We note that this proceeding presents the unusual circumstance of an applicant proposing to export volumes that exceed the capacity of the single pipeline essential to completing the transportation central to the re-export proposal.”

Australia-based Liquefied Natural Gas Ltd. announced in August 2015 that Canada’s National Energy Board (NEB) had granted Bear Head LNG Corp. and Bear Head LNG (USA) LLC authorization to export LNG from Bear Head LNG’s project site. The NEB licencing decision approves Bear Head LNG’s application for authority to export up to 8 million tonnes per annum (mtpa) of LNG from Canada starting in 2019 with expanded authority to increase production to 12 mtpa in 2024. The export licence extends for a period of 25 years from the date of first LNG export. Bear Head was also granted a licence to import 800 million cubic feet per day of natural gas from the U.S., an amount adequate to produce the authorized annual LNG exports.

Bear Head Project Director John Godbold said the favorable NEB decision continues the steady progress being made toward complete regulatory clearance for the project.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.