Interview with Natural Resources Canada: Federal policy and regulatory framework for LNG

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John Foran, Director of the Pipelines, Gas and LNG Division, Natural Resources Canada
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In this interview with John Foran, Director of the Pipelines, Gas and LNG Division at Natural Resources Canada (the Canadian federal energy department), we discuss the Government of Canada’s role in LNG project approvals, Canada’s advantages in the global LNG market, and the Government’s recent initiatives to support the creation of an LNG export industry in Canada.

Gastech News: At the recent Canada LNG Export Conference & Exhibition, you participated in a Global LNG Roundtable Debate about marketing Canada’s LNG to a local and global economy. What were the main points you made in that discussion?

John Foran: Well, first I described the role of the federal government and federal regulators in Canadian LNG project development, what policy levers exist for the Government of Canada to influence LNG development, and what Government actions have been taken to promote development of an LNG export industry in Canada. I also described our view of the situation for Canadian natural gas and LNG, and what advantages Canada has in developing an LNG export industry.

Gastech News: Okay, so what are some of the advantages that Canada brings to the table in terms of potential LNG exports?

John Foran: I began my career as a petroleum geologist, and geologists have a saying: ‘geology is destiny’. Canada has, particularly in northwest Alberta and northeast British Columbia, extremely large natural gas resources in such formations as the Montney, Horn River, and Liard. The National Energy Board’s most recent assessments, done in collaboration with provincial and territorial agencies, confirms these numbers. Canada has up to 1,500 Trillion Cubic Feet of marketable natural gas resources.

That’s our first advantage – very large, largely untapped natural gas pools that can provide feedstock for very large LNG export projects. This explains the interest in Canada from large international companies like Shell, Exxon, and Petronas. Our second big advantage is our expertise. Let’s not forget that for many years Canada was the third largest natural gas producer and second largest natural gas exporter globally. We are currently fourth largest in both categories.

With this large an industry, we have developed expertise all along the natural gas value chain from natural gas production to processing to pipelines – in industry and in our regulatory systems, and have also built a reputation as a reliable large scale natural gas exporting country.

Gastech News: What has the Canadian government done to support the industry?

John Foran: First, the Government ensures favourable tax environment, maintaining a general corporate income tax rate of 15%, almost half the 2000 rate of 29.12%. Second, the Government extended the maximum length of natural gas export licences in 2015, from 25 to 40 years. Thirdly, the Government has allowed accelerated capital cost allowance treatment for certain LNG investments.

I would also note the Government makes the final decisions on LNG export licences. We also promote Canada as a place to invest in LNG, by meeting with other governments, building their familiarity with our advantages, and participating in events such as LNG 18 (in Perth Australia this past April) with the province of British Columbia.

Gastech News: What are the new requirements for assessments of upstream greenhouse gas (GHG) associated with LNG facilities in Canada?

John Foran: The Minister of Natural Resources Canada, the Honourable Jim Carr, and the Minister of Environment and Climate Change Canada, the Honourable Catherine McKenna, outlined the new Government policy on January 27, 2016. For projects that require federal environmental assessments – and most LNG export projects do – an assessment of upstream GHG emissions that may be associated with that project will be done.

This information would be considered by the Minister of the Environment and/or Cabinet, in making final decisions on the federal environmental assessment. Upstream GHG assessments are made public. For example, the assessment for Woodfibre LNG was published on February 9, 2016 and for Pacific Northwest LNG on February 10, 2016. Following the Woodfibre assessment, Minister McKenna approved the environmental assessment for Woodfibre LNG. The environmental assessment process for Pacific Northwest LNG is still underway.

John Foran, Director of the Pipelines, Gas and LNG Division of Natural Resources Canada, spoke at the Canada LNG Export Conference and Exhibition in Vancouver on 10-12 May, a platform where the global LNG community meets to discuss and develop the future of Canada's LNG industry.

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