Oil and Gas Export Licence FAQs
- What is an export licence?
- How did the transition from the NEB to the CER affect export licence applications?
- How does the Commission typically review an application for an export licence?
- What does the Commission consider when reviewing an export licence application?
- What does a company file with the Commission when applying for an export license?
- How can someone participate in the Commission’s review of an oil or gas export licence application?
- If there is a Comment Period, do I need to apply before submitting a comment?
- What happens if the Commission finds an application is incomplete?
- What does an export licence allow? Does it authorize the construction of marine export terminals?
- Does the Commission consider environmental matters when reviewing export licence applications?
- Where can I find precedents to reference?
1. What is an export licence?
An export licence is an authorization which allows its holder to export a specific quantity of oil or gas (including liquefied natural gas, LNG, and natural gas liquids such as propane and butane) over a specific term. A term can be up to 40 years for natural gas and up to 25 years for other commodities such as propane, butane, and crude oil.
Export licenses tend to include a condition with an expiry date, often referred to as a sunset clause. Typically, exports must commence within a set period of time after the licence is issued. If exports do not commence by that date, the licence would expire.
The CER regulates exports of oil, gas, natural gas liquids, and refined petroleum products from Canada. A person must not export these products unless they have a licence or short-term order issued under Part 7 of the CER Act or as authorized under the Regulations. Export licences are governed by Division I of Part 7 of the Canada Energy Regulator Act (CER Act), as well as the National Energy Board Act Part VI (Oil and Gas) Regulations (Regulations).
2. How did the transition from the NEB to the CER affect export licence applications?
Export licences, which were previously under Part VI of the National Energy Board Act (NEB Act), are now applied for under Part 7 of the CER Act. The transition to the CER Act did not affect how the CER assesses export licence applications.Footnote 1
The National Energy Board Act Part VI (Oil and Gas) Regulations (Regulations), initially made under the NEB Act, continue to be in force under the CER Act as per the Interpretation Act. At this time, the Regulations are in the process of being updated.
The NEB filing manual remains in place. This means that a person who applies for an export licence should follow Guide Q – Export and Import Authorizations, in the filing manual, and provide the information required by the Regulations.
3. How does the Commission typically review an application for an export licence?
- The Commission typically uses a written process to review export licence applications. The Commission reviews the application for completeness (in other words, whether the application has enough information for the Commission to start evaluating it).
- Legislated timelines start once the Commission has decided that an application is complete (this is often referred to as a “completeness determination”).
- The Commission must then decide within 180 days whether to issue the export license, and the Minister of Natural Resources has an additional 90 days to approve or deny it.
- There is no requirement for a hearing for natural gas export licences in the CER Act. The Commission normally uses a process that includes public notice about the application and a period to receive comments.
- The Commission normally directs the applicant to publish a Notice of Application (Notice) and Comment Period, typically in national and/or local newspapers. A typical Notice provides instructions and information needed for potentially impacted people to submit their views and establishes deadlines for comments to be submitted.
- The Commission may issue information requests when assessing an export licence application, including before and after the completeness determination.
- The Commission reviews any submissions from potentially impacted persons.
- After weighing all of the evidence and submissions, the Commission decides whether to issue a licence.
- If the Commission decides to issue a licence, the Minister of Natural Resources must approve or deny it.
- If the Minister of Natural Resources approves the licence, the Commission must issue it within seven days after the Minister’s approval.
4. What does the Commission consider when reviewing an export licence application?
When reviewing an application, the Commission considers section 345 of the CER Act:
- The Commission must not issue a licence unless it is satisfied that the quantity of oil or gas to be exported does not exceed the surplus remaining after allowance has been made for the reasonably foreseeable requirements for use in Canada, having regard to trends in the discovery of oil or gas in Canada.
In other words, the Commission can only consider whether the proposed export will be surplus to foreseeable Canadian requirements over the requested term of the licence. This is frequently referred to as the “surplus criterion” or “surplus test”. Every applicant must demonstrate that this criterion is met. Further guidance about the information required from applicants is in the CER’s Filing Manual (Guide Q – Export and Import Authorizations). The Regulations also outline the information to be provided by the applicant for different types of export licences.
5. What does a company file with the Commission when applying for an export license?
- The source and volume of gas proposed to be exported,
- A description of gas supplies, including Canadian gas supply, expected to be available to the Canadian market (including underlying assumptions) over the requested licence term,
- A description of gas requirements (demand) for Canada (including underlying assumptions) over the requested licence term, and
- The implications of the proposed export volume on the ability of Canadians to meet their gas requirements.
In addition, information is required about the terms and conditions for the export licence that an applicant is seeking. Typical terms and conditions relate to three aspects of an LNG export licence:
- the quantity of natural gas proposed to be exported;
- the date the licence will start and the length of the term of the licence; and
- the location of the proposed export point(s).
6. How can someone participate in the Commission’s review of an oil or gas export licence application?
If the Commission requires a Comment Period, then the Notice of Application and Comment Period will describe how potentially impacted people can submit their views on the application.
Potentially impacted people should raise their concerns in their initial submission and provide all relevant supporting information in that submission. The Commission may only consider information relevant to section 345 of the CER Act, which is referred to as the “surplus criterion” or “surplus test”. Submissions may be provided in either official language.
The Applicant typically has 10 calendar days to respond to comments received by the Commission.
7. If there is a Comment Period, do I need to apply before submitting a comment?
You do not need to apply to participate in a proceeding to evaluate a proposed export licence. If you feel you are impacted by the proposed exports, you may submit your views during the Comment Period, as described in the published Notice. Comments should be relevant to section 345 of Part 7 of the CER Act, which is referred to as the “surplus criterion” or “surplus test”, or relevant to the proposed licence conditions.
8. What happens if the Commission finds an application is incomplete?
If the Commission determines an application is incomplete, it will communicate this through a letter to the applicant. This letter will be made available on the CER’s website with other documents related to the application. The Commission may ask the applicant to provide any additional information required to allow the assessment to start, or the Commission may tell the applicant that the application is incomplete and that an assessment cannot take place. If an assessment cannot take place, the applicant may apply again at any time.
9. What does an export licence allow? Does it authorize the construction of marine export terminals?
An export licence authorizes long-term oil, gas, or natural gas liquids exports from Canada, but does not authorize new or expanded facilities such as pipelines or marine export terminals. A company may need additional approvals from regulatory or government agencies to build or expand any associated, proposed infrastructure projects (e.g., liquefaction terminal or associated pipeline). An export licence does not authorize the construction of infrastructure.
10. Does the Commission consider environmental matters when reviewing export licence applications?
The CER Act specifies what the Commission may consider for an oil or gas export licence application. The Commission does not have the authority, under the CER Act, to consider environmental matters when reviewing applications for export licences. The Commission can only consider whether the oil, gas, or natural gas liquid proposed to be exported is surplus to foreseeable Canadian requirements (as set out in section 345 of the CER Act).
11. Where can I find precedents to reference?
The Regulatory documents folder with all export licence documents can be found in the CER’s regulatory database, REGDOCS. A complete list of existing export licences and ongoing export licence applications is available on the Application Schedule for export and import licences.
Recent Applications and Commission decisions on export licence applications include:
- AltaGas Application for a Licence to Export Butane [Folder 4157790]
- AltaGas Application for a Licence to Export Propane [Folder 3890336]
- Chevron Application for a Licence to Export LNG [Folder 3760155]
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