DOE okays gas exports by Pieridae Energy for re-export out of Canadian LNG project

The U.S. Department of Energy on Feb. 5 granted an October 2014 application from Pieridae Energy (USA) Ltd. 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.

The application covered a combined total volume equivalent to 292 billion cubic feet per year (Bcf/yr) of natural gas, or 0.8 Bcf per day (Bcf/d). Pieridae US stated that the U.S.-sourced natural gas will be exported to Canada at the United States-Canada border near Baileyville, Maine, at the juncture of the Maritimes & Northeast (M&N) US Pipeline and the M&N Canada Pipeline (collectively called the M&N Pipeline). Pieridae US seeks to export this volume of U.S.-sourced natural gas in any allocation among the following three “specified purposes”:

  • To use as feedstock in a proposed Canadian natural gas liquefaction facility called the Goldboro LNG Project—to be developed by one or more Pieridae affiliates and to be located in the Municipality of the District of Guysborough County Guysborough County, Nova Scotia, Canada—and for other potential uses in Canada;
  • To use as feedstock in the Goldboro LNG Project, where the U.S.-sourced natural gas is liquefied, then re-exported as LNG from Canada by vessel to one or more countries with which the United States has a free trade agreement requiring national treatment for trade in natural gas (FTA countries); and
  • To use as feedstock in the Goldboro LNG Project, where the U.S.-sourced natural gas is liquefied, then re-exported as LNG from Canada by vessel to any other country with which trade is not prohibited by U.S. law or policy (non-FTA countries).

The Goldboro LNG Project will be capable of producing the equivalent of approximately 487 Bcf/yr (1.33 Bcf/d) of pipeline-quality natural gas.

In May 2015, DOE’s Office of Fossil Energy granted the portion of Pieridae US’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, Pieridae US 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 292 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 reexport in the form of LNG from Canada to non-FTA countries…. Pieridae US requests this export authorization for a 20-year term to commence on the earlier of the date of first export or seven years from the date the authorization is granted (February 5, 2023). Pieridae also requests this authorization on its own behalf and as agent for other entities, including but not limited to its affiliate Pieridae Energy (Canada) Ltd. (Pieridae CA), which will hold title to the U.S-sourced natural gas at the time it is re-exported in the form of LNG from Canada to non-FTA countries.

“For the reasons discussed below, this Opinion and Order authorizes Pieridae US to export U.S.-sourced natural gas to Canada—using the existing pipeline capacity of the M&N US Pipeline—for liquefaction at the proposed Goldboro LNG Project, and to re-export the U.S.- sourced natural gas in the form of LNG to non-FTA countries, and/or to FTA countries for end use in non-FTA countries, up to the requested total volume of 292 Bcf/yr (0.8 Bcf/d). In so ruling, we observe that Section 3 of the NGA differentiates between exports of natural gas to non-FTA countries and exports to FTA countries. In determining whether an export is to a FTA or non-FTA country, DOE/FE must look to the trade status of the country in which the natural gas or LNG is delivered for end use. To do otherwise would allow exporters to evade the public interest review and opportunity for public participation afforded in non-FTA export proceedings under NGA section 3(a), simply by transiting the natural gas or LNG through a FTA country en route to a non-FTA country. We do not believe Congress intended the dual-track scheme it created in the NGA to be so easily evaded.

“We emphasize that this authorization is limited to volumes that can be exported using the existing capacity of the M&N US Pipeline. As discussed in Section XI.B.2, we find that the current capacity of the cross-border facilities of the M&N US Pipeline is 833,317 dekatherms per day (Dth/d), as set forth in two orders issued to Maritimes & Northeast Pipeline, L.L.C. (Maritimes) by the Federal Energy Regulatory Commission (FERC) in 2007 and 2009, respectively. The existing capacity at the cross-border facilities thus is capable of accommodating the full volume of exports requested by Pieridae US in this proceeding (0.8 Bcf/d of natural gas).”

Concurrently with this Feb. 5 order, DOE also issued an order to Bear Head LNG Corp. and Bear Head LNG (USA) LLC granting long-term authority to export U.S.-sourced natural gas through Canada to non-FTA countries (and/or to FTA countries for end use in non-FTA countries) after liquefaction in Canada at a separate LNG project in Nova Scotia. Because both Pieridae US and Bear Head LNG propose to use the M&N US Pipeline to transport U.S.-sourced natural gas to Canada, DOE said it is limiting the combined authorized export volume in this Pieridae order and the Bear Head LNG order to a total of 0.81 Bcf/d of natural gas—the capacity of the cross-border facilities and the existing Presidential Permit. “We are attaching a similar condition to the Bear Head LNG authorization requiring the submission of a new export application should the M&N US Pipeline seek to increase its capacity in the future due in whole or in part to export operations,” said DOE. “Therefore, the non-FTA export volumes in this Order and the Bear Head LNG order are not additive to one another.”

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.