NATIONAL ENERGY BOARD. IN THE MATTER OF the National Energy Board Act, RSC, 1985, c. N-7, as amended, and the Regulations made thereunder;

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1 NATIONAL ENERGY BOARD IN THE MATTER OF the National Energy Board Act, RSC, 1985, c. N-7, as amended, and the Regulations made thereunder; AND IN THE MATTER OF an Application by AltaGas DCLNG General Partner Inc., on behalf of AltaGas DCLNG Lease Limited Partnership for a licence pursuant to section 117 of the National Energy Board Act authorizing the export of liquefied natural gas. To: Secretary National Energy Board th Avenue SW Calgary, AB T2R 0A8 APPLICATION BY ALTAGAS DCLNG GENERAL PARTNER INC., ON BEHALF OF ALTAGAS DCLNG LEASE LIMITED PARTNERSHIP FOR A LICENCE TO EXPORT LIQUEFIED NATURAL GAS JUNE 1, 2015

2 I APPLICATION 1. AltaGas DCLNG General Partner Inc., on behalf of AltaGas DCLNG Lease Limited Partnership, hereby applies to the National Energy Board ("NEB" or "Board"), pursuant to section 117 of the National Energy Board Act ("NEB Act"), for a licence to export liquefied natural gas ("LNG") in accordance with the following terms and conditions: Term: Early Expiration Date: Annual Quantity: Term Quantity: Export Point: The term of the licence shall commence on the date of first export of gas, in the form of LNG, and shall continue for a period of 25 years thereafter. Unless otherwise directed by the Board, the term of the licence shall end 10 years after the date of issuance of the licence if the export of gas has not commenced on or before that date. The quantity of gas that may be exported in any 12-month period shall not exceed m 3 or 365 Bcf. The quantity of gas that may be exported over the term of the licence shall not exceed m 3 or Bcf. The point of export from Canada will be at the outlet of the loading arm of the gas liquefaction facility located at District Lot 99, which is approximately 8 kilometres west of Kitimat, British Columbia. 2. In submitting this application, the Applicant has had regard for: the criteria for considering an application for a licence to export gas, set out in section 118 of the NEB Act, that the Board shall satisfy itself that the quantity of gas to be exported does not exceed the surplus remaining after due allowance has been made for the reasonably 1

3 forseeable requirements for use in Canada, having regard to the trends in the discovery of gas in Canada; the filing requirements set out in Guide Q of the Board's Filing Manual; the Interim Memorandum of Guidance Concerning Oil and Gas Export Applications and Gas Import Applications under Part VI of the National Energy Board Act ("Interim MOG") issued by the Board on July 11, 2012; and the Board's Letter Decision dated February 4, 2013 respecting the export application of LNG Canada Development Inc. ("LNG Canada") and subsequent Decisions of the Board respecting export applications of other parties. 3. The Applicant is filing in this Application information to demonstrate that the quantity of gas to be exported by it does not exceed the surplus remaining after due allowance has been made for the reasonably forseeable requirements for use in Canada, having regard to the trends in the discovery of gas in Canada, as required by section 118 of the NEB Act. Consistent with Guide Q of the Filing Manual, the Interim MOG and the LNG Canada Letter Decision, the Applicant seeks relief from the filing requirements contained in section 12 of the National Energy Board Act Part VI (Oil and Gas) Regulations ("Part VI Regulations"), except where those requirements are addressed in this application. 2

4 II BACKGROUND (a) The Applicant 4. AltaGas DCLNG Lease Limited Partnership is a partnership established under the laws of British Columbia. The general partner of AltaGas DCLNG Lease Limited Partnership is AltaGas DCLNG General Partner Inc., which is a company registered to do business in British Columbia. (b) The LNG Project 5. AltaGas DCLNG Lease Limited Partnership holds a long term lease agreement with the Haisla Nation on District Lot 99, which is located approximately 8 kilometres west of Kitimat, British Columbia. AltaGas DCLNG Lease Limited Partnership is proposing to develop an LNG project at the site with a gas export capacity of 1 Bcfd. 6. The LNG project will be developed in two phases. The first phase will consist of floating liquefaction facilities with the capacity to receive 110 Mmcfd of gas. The other parties involved in the first phase are: AltaGas Idemitsu Joint Venture Limited Partnership - a partnership between AltaGas Ltd., which is a leading energy infrastructure company in North America, and Idemitsu Kosan Co., Ltd., which is Japan's second largest petroleum company and is a global leader in the supply of energy, petroleum, and other products; EXMAR NV - an independent Belgium-based company which is a leading provider of transportation, regasification and liquefaction solutions in the natural gas industry; and EDF Trading Limited - a subsidiary and wholesale market operator of Électricité de France S.A., an international energy company with over 39 million customers. 3

5 The intent is to make a final investment decision with respect to the first phase by the end of 2015 and to commence first deliveries of LNG in The second phase of the LNG project will consist of floating liquefaction facilities which will increase the gas export capacity of the project up to 1 Bcfd. If the first phase were not to be developed, the design of the second phase would be for 1 Bcfd. (c) Transportation Arrangements 8. Gas for the first phase of the LNG project will be transported to the liquefaction site via the existing Pacific Northern Gas Ltd. ("PNG") system. The second phase of the LNG project will require an expansion of the PNG system. PNG has completed the initial site work for a loop of its existing pipeline. (d) Gas Supply 9. The feed gas for the LNG project will be supplied from the Western Canadian Sedimentary Basin and will be secured through a mixture of gas purchase contracts made directly with other resource holders and supply through transactions made at market hubs. It is anticipated that the LNG facility will be connected by pipeline systems to the principal market hubs, including AECO/NIT and Station 2, where large volumes of natural gas are traded and market prices are established through trading. III SURPLUS DETERMINATION 10. The Applicant is submitting herewith: a report prepared by HSB Solomon Associates Canada Ltd. ("Solomon") entitled "Long-Term Natural Gas Supply and Demand Forecast to 2050"; and a report prepared by Roland Priddle entitled "A Description of the Implications on the ability of Canadians to meet their natural gas 4

6 requirements and an Assessment of whether this gas is surplus to reasonably foreseeable requirements for use in Canada". 11. The Solomon report provides forecasts of Canadian and North American gas supply and gas demand for the period 2018 to 2050 and shows that supply will exceed demand, including projected demand from LNG exports, over this period. 12. Mr. Priddle's report addresses the operation of the continental gas market and concludes that the export of gas proposed by the Applicant will not cause Canadians any difficulty in meeting their natural gas requirements at fair market prices over the forecast period. 13. The assessments of Solomon and Mr. Priddle demonstrate that the quantity of gas to be exported by the Applicant does not exceed the surplus remaining after due allowance has been made for the reasonably foreseeable requirements for use in Canada, having regard to the trends in the discovery of gas in Canada. IV RELIEF REQUESTED 14. The Applicant respectfully requests that the Board issue a licence authorizing the export of natural gas subject to the following terms and conditions: Term: Early Expiration Date: Annual Quantity: The term of the licence shall commence on the date of first export of gas, in the form of LNG, and shall continue for a period of 25 years thereafter. Unless otherwise directed by the Board, the term of the licence shall end 10 years after the date of issuance of the licence if the export of gas has not commenced on or before that date. The quantity of gas that may be exported in any 12-month period shall not exceed m 3 or 365 Bcf. 5

7 Term Quantity: Export Point: The quantity of gas that may be exported over the term of the licence shall not exceed m 3 or Bcf. The point of export from Canada will be at the outlet of the loading arm of the gas liquefaction facility located at District Lot 99, which is approximately 8 kilometres west of Kitimat, British Columbia. ALL OF WHICH IS RESPECTFULLY SUBMITTED this 1 st day of June, AltaGas DCLNG General Partner Inc., on behalf of AltaGas DCLNG Lease Limited Partnership by its counsel, Norton Rose Fulbright Canada LLP Per: D. G. Davies, Q.C. 6

8 Communications related to this application should be directed to: Wendy Thomas AltaGas Ltd. 1700, th Avenue SW Calgary, AB T2P 0J1 Telephone: Fax: wendy.thomas@altagas.ca and to: Alisa Skoropat AltaGas Ltd. 1700, th Avenue SW Calgary, AB T2P 0J1 Telephone: Fax: alisa.skoropat@altagas.ca and to: D. G. Davies, Q.C. Norton Rose Fulbright Canada LLP 3700 Devon Tower 400 Third Avenue SW Calgary, AB T2P 4H2 Telephone: Fax: don.davies@nortonrosefulbright.com 7

LETTER DECISION. File OF-EI-Gas-GL-Q June 2015

LETTER DECISION. File OF-EI-Gas-GL-Q June 2015 File OF-EI-Gas-GL-Q027-2014-01 01 30 June 2015 LETTER DECISION Mr. Shawn Denstedt, Q.C. Osler, Hoskin & Harcourt LLP Suite 2500, TransCanada Tower 450 1 st Street SW Calgary, AB T2P 5H1 Facsimile 403-260-7024