Appe nd ixA:
(Am e nd e d )Re vie w a nd Ana lysisof
N a tura lGa sSupplya nd De m a nd
Fore c a stsforCa na d a a nd ExportIm pa c t
Asse ssm e ntofGold b oroLN G
Dufour Energy Commodities
Pre pa re d for:
Pie rid a e Ene rg y(Ca na d a ) Ltd
April11,2014
© Dufour Energy Commodities, 2014
DISCLAIMER
This re portre vie w s d a ta a nd fore c a sts from a num b e r ofstud ie s und e rta ke n b y or for
se le c t g ove rnm e nt a g e nc ie s in Ca na d a a nd the Unite d Sta te s.The inform a tion in the se
stud ie s a re re lie d upon fora na lysisa nd b e lie ve d to b e a c c ura te ;how e ve r,DufourEne rg y
Com m od itie sd oe snotg ua ra nte e the a c c ura c yofsuc h inform a tion.
2
Contents
OVERVIEW ...............................................................................................................................................................4
Introd uc tion.......................................................................................................................................................4
GAS RESOURCES AN D PRODUCTION FORECASTS..................................................................................5
US Ga sRe sourc e ...............................................................................................................................................5
Ca na d ia nGa sRe sourc e ..................................................................................................................................6
Atla ntic Ca na d a Ga sRe sourc e .....................................................................................................................8
N orthe a stU.S.Sha le Ba sins..........................................................................................................................9
Re sourc e Conc lusions..................................................................................................................................10
N ATURALGAS SUPPLY /DEM AN D BALAN CE.......................................................................................10
U.S........................................................................................................................................................................10
Fore c a sts...........................................................................................................................................................10
Ca na d ia nFore c a st.........................................................................................................................................11
Atla ntic Ca na d a Fore c a st,W ithoutGold b oroLN G Proje c t............................................................12
Atla ntic Ca na d a Fore c a st,W ith Gold b oroLN G Proje c t..................................................................15
N EB ASSESSM EN T OFSURPLUS..................................................................................................................17
Ad d itiona lDa ta File d in SupportofCa na d ia n Surplus...................................................................17
SURPLUS STATUS..............................................................................................................................................17
SUM M ARY.............................................................................................................................................................19
3
OVERVIEW
Introduction
Pieridae Energy (Canada) Ltd. ("Pieridae" or"Applicant"), ha sa pplie d to the N a tiona l
Ene rg y Boa rd (“NEB”) fora lic e nc e to im portup to 1.0 b illion c ub ic fe e tpe rd a y ofna tura l
g a s(Bc f/d ) a nd to e xportup to10 m illion tonne spe rye a roflique fie d na tura lg a s("LN G")
ora b out1.4 Bc f/d .Itha sre que ste d a lic e nse te rm of20 ye a rs.The proje c tisre fe rre d toa s
the Gold b oroLN G Proje c t("Project"or“Terminal”).
Pie rid a e se e ks the im porta tion ofna tura l g a s from the U.S.throug h the M a ritim e s a nd
N orthe a stPipe line .Im porte d na tura lg a sa nd na tura lg a sprod uc e d in Ca na d a w ould supply
the fe e d stoc k tothe Proje c ton the M a ritim e sa nd N orthe a stCa na d a pipe line .The d e live re d
g a sisproc e sse d a tthe Te rm ina lloc a te d ne a rGold b oro,N ova Sc otia . LN G c a rrie rsd e live r
the LN G to m a rke ts m a inly in Europe ,Ca rib b e a n,South Am e ric a a nd othe r re g ions.The
Proje c tpla nstha tpa rtofthe LN G prod uc tion w illb e use d forthe LN G b unke ring ofoc e a n
g oing shipsa nd forna tura lg a sve hic le sin N orth Am e ric a .Pie rid a e re ta ine d DufourEne rg y
Com m od itie s("Dufour Energy") toprovid e a n ind e pe nd e ntre vie w a nd a na lysisofe xisting
stud ie stha tfore c a stthe Ca na d ia n,Atla ntic Ca na d a ,a nd N orth Am e ric a n na tura lg a ssupply
a nd d e m a nd e xpe c ta tions ove r the te rm ofthe re que ste d lic e nse .This re port pre se nts
sum m a ry find ing son g a ssupply,d e m a nd ,a nd m a rke td yna m ic sthroug h 2040,a nd d ra w s
re la te d c onc lusions.
Dufour Ene rg y re vie w e d six stud ie s re la ting to the fore c a sts ofsupply a nd d e m a nd for
na tura lg a sinCa na d a ,Atla ntic Ca na d a a nd N orth Am e ric a :
1. Canada’s Energy Future 2013, Energy Supply and Demand Projections to 2035,
N a tiona lEne rg yBoa rd ,N ove m b e r2013
2. The Future of natural Gas Supply for Nova Scotia, ICF Consulting Ca na d a , Inc .
Pre pa re d forthe N ova Sc otia De pa rtm e ntofEne rg y,M a rc h 2013
3. Annual Energy Outlook 2013, with Projections to 2040,U.S.Ene rg y Inform a tion
Ad m inistra tion (EIA),the sta tistic a la nd a na lytic a la g e nc y w ith the U.S.De pa rtm e nt
ofEne rg y.,April2013
4. Review of Emerging Resources: U.S. Shale Gas and Shale Oil Plays,U.S.Ene rg y
Inform a tionAd m inistra tion,July2011
5. Assessment of the Undiscovered Oil and Gas Resources of the Ordovician Utica
Shale of the Appalachian Basin Province 2012,U.S.Ge olog ic a lSurve y
6. Assessment of Undiscovered Oil and Gas Resources of the Devonian Marcellus.
shale of the Appalachian Basin Province 2011,U.S.Ge olog ic a lSurve y
DufourEne rg y a lso re vie w e d LN G e xporta pplic a tionsputb e fore the N EB w ithin the la st5
ye a rs a nd a ssoc ia te d e vid e nc e provid e d re la ting to d e stina tion ofa surplus a va ila b le for
e xport.
4
GAS RESOURCES AND PRODUCTION FORECASTS
US Gas Resource
The U.S.De pa rtm e ntofEne rg y’s Ene rg y Inform a tion Ad m inistra tion (“EIA”) c ontinua lly
re vie w s the e ne rg y re sourc e s ofthe Unite d Sta te s.The ir la te st fore c a stfor na tura l g a s
prod uc tionthroug h to2040 isshow ninthe ta b le sb e low .
EIA U.S. Natural Gas Production Forecasts 1
Trillion Cubic Feet Per Year
Supply
2010
Dry Gas Production
Supplemental
natural
gas
2011
2020
21.33
23
0.06
0.06
2.6
1.95
Pipeline
2.24
1.67
LNG
0.37
0.28
23.99
25.01
26.53
Net Imports
Total Supply
26.61
2025
2030
2035
31.35
2040
28.59
29.79
33.14
0.06
0.06
0.06
0.06
0.06
-0.14
-1.58
-2.1
-2.55
-3.55
0.13
-0.52
-0.67
-1.09
-2.09
-0.26
-1.06
-1.43
-1.46
-1.46
27.07
27.75
28.86
29.65
2035
2040
Billion Cubic Feet Per Day
Supply
2010
Dry Gas Production
Supplemental
natural
gas
2011
2020
0.2
0.2
0.2
0.2
0.2
0.2
0.2
7.1
5.3
-0.4
-4.3
-5.8
-7.0
-9.7
Pipeline
6.1
4.6
0.4
-1.4
-1.8
-3.0
-5.7
LNG
1.0
0.8
-0.7
-2.9
-3.9
-4.0
-4.0
65.7
68.5
72.7
74.2
76.0
79.1
81.2
Total Supply
78.3
2030
63.0
Net Imports
72.9
2025
58.4
81.6
85.9
90.8
N ote :1
The EIA fore c a sts U.S.to inc re a se d a ily g a s prod uc tion from 63 Bc f/d a y in 2011 to 91
Bc f/d a yin 2040,ora n inc re a se ofa b out44% ove rthe fore c a stpe riod .Ofnote toCa na d a in
thisfore c a stisthe e xpe c ta tion pipe line g a sim portsw illb e re d uc e d to the pointw he re the
U.S.w illb e a ne te xporte rofpipe line g a sb y 2025.By 2040 the EIA se e sthe U.S.e xporting
a pproxim a te ly6 Bc f/d a yb ypipe line route s.
Ofnote istha tthe la te stproje c tionsw hic h ha ve b e e nre le a se d from the U.S EIA show ing a n
inc re a se d prod uc tion e xpe c ta tions ove r the 2013 e stim a te s.The g e ne ra love rvie w ofthe
e a rly re le a se c a n b e e nc a psula te d in the sum m a ry on na tura lg a s,w hic h isa sfollow s:“In
addition to increases in domestic consumption in the industrial and electric power sectors,
U.S. exports of natural gas also increase in the AEO2014 Reference case (Figure 4). U.S.
1 U.
S.Ene rg yInform
5
a tionAd m inistra tion,Annual Energy Outlook 2013,Ta b le A13,Re fe re nc e Ca se ,pa g e 147
exports of liquefied natural gas (LNG) increase to 3.5 Tcf in 2029 and remain at that level
through 2040. Pipeline exports of U.S. natural gas to Mexico grow by 6% per year, from 0.6
Tcf in 2012 to 3.1 Tcf in 2040, and pipeline exports to Canada grow by 1.2% per year, from 1.0
Tcf in 2012 to 1.4 Tcf in 2040. Over the same period, U.S. pipeline imports from Canada fall by
30%, from 3.0 Tcf in 2012 to 2.1 Tcf in 2040, as more U.S. demand is met by domestic
production.”2
The c ha ng e s in g a s prod uc tion fore c a sts from 2013 to 2014 for the Re fe re nc e Ca se a re
c om pa re d inthe follow ing ta b le .
Reference
Case
Forecast
Trillion Cubic Feet Per Year
Dry Natural Gas
2013 Report
2014 Final
Release
2011
2025
2040
23
28.59
33.14
23
31.4
37.5
Billion Cubic Feet Per Day
Dry Natural Gas
2013 Report
2014 Early
Release
2011
2025
2040
63.0
78.3
90.8
63.0
86.0
102.7
Attention: The remainder of this review will refer to the 2013 U.S. EIA Annual Energy
Outlook. The table has been updated for the final gross data for the 2014 Outlook however at
the time of the amendment to this application the detailed information had not been made
publically available. In general the 2014 Annual Energy Outlook simply reinforces previously
recognizes continued trends in the gas industry and what is reported in the 2013 version.
Canadian Gas Resource
The N EB la te stfore c a stofe stim a te d g a sre se rve sinCa na d a sum m a rize d inthe ta b le b e low .
Remaining Marketable
Gas Resources (Dec 2012)
TCF
WCSB
861
West Coast
17
Northern Canada
116
8
Ontario & Quebec
East Coast
91
2 U.
S.Ene rg yInform
6
a tionAd m inistra tion,Annual Energy Outlook 2014,Fina lRe le a se Sum m a ryDa ta
N ote :3
Total
1093
The N EB a lsoa fore c a stofe xpe c te d d a ilyprod uc tion in the irRe fe re nc e Ca se ,the g ra phic of
w hic h isre prod uc e d b e low .
N ote :4
In the N EB’s,re fe re nc e c a se ,“Canadian marketable natural gas production declines
from 373.1 106m3/d (13.2 Bcf/d) in 2013 to 318.2 106m3/d (11.2 Bcf/d) in 2018. As
rising prices and LNG exports support higher drilling levels, production ramps up
continuously from 2019 onwards, reaching 494.0 106m3/d (17.4 Bcf/d) in 2035.”
The N EB a lso prod uc e d a se rie sofpote ntia lg a sprod uc tion sc e na rios,te rm e d H ig h
Ca se ,Re fe re nc e Ca se a nd Low Ca se .Prod uc tion fore c a stsforthe se thre e c a se s a re
show n inthe ta b le b e low .
Total Canadian
Marketable
Gas Production 2035
Bcf/d
High Case
23.0
Reference Case
17.0
Low Case
11.2
Canada’s Energy Future 2013, Energy Supply and Demand Projections to 2035, N a tiona lEne rg y Boa rd ,
N ove m b e r2013,Ta b le 6.1,pa g e 50
4 Canada’s Energy Future 2013, Energy Supply and Demand Projections to 2035, N a tiona lEne rg y Boa rd ,
N ove m b e r2013,Fig ure 6.2,pa g e 52
3
7
N ote :5
DufourEne rg y note sthe ra ng e offore c a ste d prod uc tion le ve lsin Ca na d a for2035
va rie sb y a b out12 Bc f/d b e tw e e n the Low Ca se a nd the H ig h Ca se .Thisw id e ra ng e
re sultsfrom d iffe re nta ssum ptionson und e rlying g a spric e sa nd the re sulting e ffe c t
on e xplora tiona nd d e ve lopm e ntinCa na d a .
Atlantic Canada Gas Resource
The ICFstud y,c om m issione d b y the Gove rnm e ntofN ova Sc otia in M a rc h of2013,
id e ntifie d the re c ove ra b le re sourc e s a va ila b le in Atla ntic Ca na d a g ive n the
fore c a ste d pric ing e nvironm e nta sthe irBa se Ca se .
ICF Atlantic Canada Base Case
Recoverable Resource (Tcf)
Off Shore Nova Scotia Producing
New Brunswick Producing
Nova Scotia Off/Onshore
Discoverable
New Brunswick Discoverable
Total
Initial
4.6
0.1
Remaining
Recoverable
1.7
0.1
120.0
67.0
72.0
1.3
192
75
N ote :6
ICF’se stim a te ofre c ove ra b le re se rve sisb a se d upon the irBa se Ca se pric e fore c a st.
This Ba se Ca se fore c a stha s N orth Am e ric a n na tura lg a s pric e s a ve ra g ing b e tw e e n
$4.00 to$6.00/M M Btu b e tw e e n 2016 a nd 2035.7
Of note is ICF’s Ba se Ca se fore c a st ha s the e xplora tion a nd d e ve lopm e nt of
M a ritim e s Ca na d a g a s re se rve s sta g na ntthroug h 2035. This re sults from ofthe
e c onom ic s of M a rc e llus a nd Utic a sha le d e ve lopm e nts in the N orthe a st US
c om pe ting a g a instthe sha le pla ys in N e w Brunsw ic k a nd the offshore N ova Sc otia
re se rve s.8 Und e rthisBa se Ca se ,ICFha sa fore c a stofoffshore N ova Sc otia d e c lining
from c urre ntle ve lstoprod uc ing only90 M M c f/d b y2035.9
5 Canada’s
Energy Future 2013, Energy Supply and Demand Projections to 2035, N a tiona lEne rg y Boa rd ,
N ove m b e r2013,Fig ure ,pa g e 53
6 The Future of natural Gas Supply for Nova Scotia, ICFConsulting Ca na d a ,Inc .Pre pa re d for the N ova
Sc otia De pa rtm e ntofEne rg y,M a rc h 2013,Ta b le 2-2,pa g e 27
7The Future of natural Gas Supply for Nova Scotia, ICFConsulting Ca na d a ,Inc .Pre pa re d forthe N ova Sc otia
De pa rtm e ntofEne rg y,M a rc h 2013,Ta b le 2-2,pa g e 39
8 The Future of natural Gas Supply for Nova Scotia, ICFConsulting Ca na d a ,Inc .Pre pa re d forthe N ova Sc otia
De pa rtm e ntofEne rg y,M a rc h 2013,pa g e 38
9 The Future of natural Gas Supply for Nova Scotia, ICFConsulting Ca na d a ,Inc .Pre pa re d forthe N ova Sc otia
De pa rtm e ntofEne rg y,M a rc h 2013,Fig ure 3-9,pa g e 36
8
Sim ila rly,N EB fore c a sta ssum ptions show M a ritim e s Ca na d a prod uc tion d e c lining
d ue to little or no d e ve lopm e ntin the sha le pla ys in N e w Brunsw ic k or offshore
N ova Sc otia –re sulting from b e ing une c onom ic a tfore c a ste d N orth Am e ric a n g a s
pric e s.10
Dufour Energy notes both the ICF and NEB forecasts conclude that Maritimes
Canada gas resources will not be competitive with shale plays in the Northeast
U.S., or North American in general, and will therefore remain undeveloped
until there is a significant increase in the gas price regime that improves the
economics.
Northeast U.S. Shale Basins
The U.S.Ge olog ic a l Surve y (USGS) und e rtook a g e olog y-b a se d a sse ssm e nt ofthe
M a rc e llus sha le of the Appa la c hia n Ba sin. “The USGS assessed the technically
recoverable, undiscovered continuous. (unconventional) gas within the Marcellus.
Shale and estimated a mean of 84,198 billion cubic feet of gas and a mean of 3,379
million barrels of total natural gas liquids.” 11
The USGS a lso und e rtook a g e olog y-b a se d a sse ssm e ntofthe Ord ovic ia n Utic a Sha le
of the Appa la c hia n Ba sin in 2012. “The USGS assessed technically recoverable
continuous. (unconventional) oil and gas resources for the Ordovician Utica and Point
Pleasant black shale of the Appalachian Basin Province, resulting in estimated means
of 940 MMBO, 38.2 trillion cubic feet of gas (TCFG), and 208 million barrels of natural
gas liquids (MMBNGL)” 12
The tota lofthe tw ore sourc e b a sinse stim a te sa re show n inthe ta b le b e low :
Total Petroleum System
(TPS)
and Assessment Units (AU)
Field
type
AU
probability
Total
undiscovered
resources
Gas (TCF)
F95
F50
F5
Marcellus
Gas
1.0
42.9
78.7
144.1
Utica
Gas
1.0
20.3
35.6
59.4
63
114
204
Total
resources
undiscovered
Canada’s Energy Future 2013, Energy Supply and Demand Projections to 2035, N a tiona lEne rg y Boa rd ,
N ove m b e r2013,Fig ure ,pa g e 53
11 Assessment of Undiscovered Oil and Gas Resources of the Devonian Marcellus. U.S. shale of the
Appalachian Basin Province 2011,U.S.U.S.Ge olog ic a lSurve y,pa g e 2
12 Assessment of the Undiscovered Oil and Gas Resources of the Ordovician Utica Shale of the
Appalachian Basin Province 2012,U.S.U.S.Ge olog ic a lSurve y,pa g e 5
10
9
The USGS c onc lud e s tha t b e tw e e n the se tw o b a sins the re is a ra ng e of g a s re se rve s
b e tw e e n 63 to204 Tc f.
Resource Conclusions
DufourEne rg y’s re vie w ofthe se re sourc e fore c a sts a nd a sse ssm e nts,le a d s itto c onc lud e
tha t:
1) Dufour Ene rg y c onsid e rs tha tN orth Am e ric a n g a s re sourc e s a re prolific a nd w e ll
a b le to m e e tCa na d ia n c onsum e rs'e ne rg y re quire m e nts a tfa irm a rke tpric e s ove r
the re que ste d lic e nc e pe riod .
2) Ca na d ia n g a s re sourc e is a pproxim a te ly 1,093 Tc f,sub je c tto va ria b ility ofthe g a s
pric e e nvironm e nt,w hic h ha s a la rg e e ffe c ton e xplora tion a nd prod uc tion e ffort
ove rthe fore c a stpe riod .
3) Ca na d ia n g a s prod uc tion should a ve ra g e a b out 17 Bc f/d b y 2035, sim ila r to
prod uc tionin2000.
4) The U.S.b a se d g a sre sourc e prod uc tion w illinc re a se from a pproxim a te ly 63 Bc f/d
in 2011 to 90 Bc f/d in 2040 und e r m od e st pric ing e nvironm e nt. This g ive s
c om b ine d Ca na d a a nd U.S.prod uc tion e stim a te ofa b out107Bc f/d .
a . W ithin the fore c a st,the U.S.e xpe c tsto m ove from a ne tim porte rofpipe line
na tura l g a s in 2020 to a ne t e xporte r of pipe line na tura l g a s in 2040 of
a pproxim a te ly5.7Bc f/d .
b . The U.S.a lsoe xpe c tstoe xportLN G inthe ord e rof4.0 Bc f/d b y2040.
5) The M a rc e llus a nd Utic a sha le b a sin pla ys,w hic h a re g e og ra phic a lly c lose stto the
M a ritim e sCa na d a re g ion,ha ve a ra ng e ofre sourc e e stim a te sofb e tw e e n 63 Tc fto
204 Tc fd e pe nd ing uponthe pric e e nvironm e nt.
6) The Atla ntic Ca na d a re g ionha sa re sourc e e stim a te of a pproxim a te ly75 Tc f,
a . The m a jority ofthe re sourc e b e ing offshore N ova Sc otia a nd N e w Brunsw ic k
sha le pla ys.
b . The fore c a ste d N orth Am e ric a n g a spric ing e nvironm e nta nd c om pe ting g a s
b a sins m e a ns itis unlike ly to a ttra c td e ve lopm e ntc a pita l ove r the lic e nc e
pe riod .
NATURAL GAS SUPPLY / DEMAND BALANCE
U.S. Forecasts
The U.S.c onsum e d m ore na tura lg a s tha n itprod uc e d d om e stic a lly in 2011-2012.Itm e t
this shortfa llw ith im ports from Ca na d a ofa b out2 Tc f. U.S.EIA’s fore c a ste d prod uc tion
g row th in the US throug h 2040 w illm a ke the U.S.a ne te xporte rofna tura lg a sb y 2020.13
The U.S.EIA e xpe c tsna tura lg a sprod uc tion w illg row b ya pproxim a te ly1 pe rc e ntpe rye a r
from 2011 to 2040.14 The la rg e sta re a ofg row th re sultsfrom sha le g a s,tig htg a sa nd c oa l
13
14
U.S.U.S.Ene rg yInform a tionAd m inistra tion,Annual Energy Outlook 2013,pa g e 78
U.S.U.S.Ene rg yInform a tionAd m inistra tion,Annual Energy Outlook 2013,pa g e 78
10
b e d m e tha ne .The U.S.EIA fore c a stse xportsto M e xic o w illinc re a se from a b out0.5 Tc f/y
c urre ntlytoa b out2.4 Tc f/yin 2040.15
Im porta ntly forCa na d a ,the U.S.EIA fore c a sts,“Net natural gas imports from Canada decline
sharply from 2016 to 2022, then stabilize somewhat before dropping off again in the final
years of the projection, as continued growth in domestic production mitigates the need for
imports. Even as overall consumption exceeds supply in the United States, some natural gas
imports from Canada continue, based on regional supply and demand conditions.” 16
The im plic a tionsofthisfore c a sta re tha t,a sCa na d ia n g a sim portsd e c line in the irtota lity,
the re w ill b e c ha ng e s in re g iona l im port/e xportflow s b e tw e e n Ca na d a a nd the US.The
e xpe c te d re g iona l flow c ha ng e s a re for Ea ste rn Ca na d a to re c e ive im ports from the US
w hic h b a c k outw e ste rn Ca na d ia n g a s supplie s.M a ritim e s Ca na d a re pla c e s its d e c lining
prod uc tion w ith U.S.N orthe a stg a sim ports.
Canadian Forecast
The N EB’s fore c a stofthe supply d e m a nd b a la nc e note s tha t,“Canadian exports, all to the
U.S., have been declining the last few years. Gas imports into Canada from the U.S. have been
increasing because of Marcellus shale gas entering the Ontario market. In 2012, total
Canadian imports were 80.8 106m3/d (2.9 Bcf/d). For context, this is a level close to total
Ontario natural gas consumption. Declining exports and increasing imports have resulted in
decreasing net exports out of Canada since 2007.”17
In the N EB’s Re fe re nc e Ca se fore c a st,the surplus b e tw e e n Ca na d ia n g a s prod uc tion a nd
d e m a nd ism e tthroug h e xportse a c h ye a r.In itsRe fe re nc e Ca se ,g a sa va ila b le fore xportin
2035 isa pproxim a te ly 4.5 Bc f/d .18 In the N EB H ig h Pric e Ca se ,ne tg a sa va ila b le fore xport
from Ca na d a is a pproxim a te ly 10.7Bc f/d a y.19 In its Low Pric e Ca se the N EB a lso sta te s,
“The North American natural gas market is highly integrated and market forces will ensure
sufficient supplies will exist to meet Canadian gas demand at a market-driven natural gas
price. In a low price environment where Canadian production falls below demand, sufficient
low-cost supplies from the U.S. would be imported to meet Canadian gas demand.”20
One ofthe im porta nta ssum ptions for the se N EB fore c a sts,w hic h is note d ,is suffic ie nt
infra struc ture to m ove g a s to d om e stic a nd e xportm a rke ts a s m a rke tc ond itions d ic ta te ;
a nd tha tthe re is suffic ie ntd e m a nd for Ca na d ia n e xports e ithe r throug h pipe line s or a s
LN G.
15 U.
S.U.S.Ene rg yInform
a tionAd m inistra tion,Annual Energy Outlook 2013,pa g e 79
a tionAd m inistra tion,Annual Energy Outlook 2013,pa g e 79
17Canada’s Energy Future 2013, Energy Supply and Demand Projections to 2035, N a tiona lEne rg y Boa rd ,
N ove m b e r2013,pa g e 54
18 Canada’s Energy Future 2013, Energy Supply and Demand Projections to 2035, N a tiona lEne rg y Boa rd ,
N ove m b e r2013,Fig ure ,pa g e 53
19 Canada’s Energy Future 2013, Energy Supply and Demand Projections to 2035, N a tiona lEne rg y Boa rd ,
N ove m b e r2013,Fig ure ,pa g e 55
20 Canada’s Energy Future 2013, Energy Supply and Demand Projections to 2035, N a tiona lEne rg y Boa rd ,
N ove m b e r2013,Fig ure ,pa g e 55
16 U.
S.U.S.Ene rg yInform
11
Dufour Energy’s relevant conclusion is that the NEB sees Canadian domestic gas
needs being met and exceeded in its Low, Reference and High case forecast to 2035
including gas export activity. The main driver of gas production activity remains
production costs vs market prices for the commodity.
Atlantic Canada Forecast, Without Goldboro LNG Project
M & N P isthe 1,101-kilom e tre m a inline tra nsm ission pipe line b uiltto tra nsportna tura lg a s
from d e ve lopm e nts in offshore N ova Sc otia to m a rke ts in M a ritim e s Ca na d a a nd the
N orthe a ste rn U.S.The M & N P syste m c onsists of30"/24" d ia m e te rund e rg round m a inline
running from Gold b oro, N ova Sc otia throug h N ova Sc otia a nd N e w Brunsw ic k to the
Ca na d ia n -U.S.b ord e rne a rBa ile yville ,M a ine .The pipe line c ontinue s throug h M a ine a nd
N e w H a m pshire into M a ssa c huse tts w he re itc onne c ts w ith the e xisting N orth Am e ric a n
pipe line g rid a t Dra c ut, M a ssa c huse tts. The pipe line a lso e xte nd s from M e thue n,
M a ssa c huse ttsto Be ve rly,M a ssa c huse tts.M & N P a lso provid e sna tura lg a sto d ow nstre a m
N orth Am e ric a n m a rke ts throug h inte rc onne c ts w ith Portla nd N a tura l Ga s Tra nsm ission
Syste m ,Te nne sse e Ga sTra nsm ission,a nd Alg onquinGa sTra nsm ission.
The ICF’s Ba se Ca se fore c a st show s M a ritim e s Ca na d a g a s c onsum ption inc re a sing
m od e stlyto a b out70 Bc f/y b y2020.21 The Ba se Ca se a lso note sthe m a jority ofd e m a nd in
M a ritim e s Ca na d a is re la te d to ind ustria l loa d ra the r tha n re sid e ntia lor c om m e rc ia l.As
suc h,the re isle sssum m e r/w inte rse a sona litytog a sd e m a nd tha n in othe ra re a sofCa na d a .
The ICFBa se Ca se ha sa proje c tse a sona lva ria tion of240 M M c f/d in the w inte rm onthstoa
low of170 M M c f/d inthe sum m e rm onths.22
ICF’sBa se Ca se fore c a sta g re e sw ith the N EB fore c a stin se e ing M a ritim e sCa na d a c urre nt
prod uc tion,w hic h is pre d om ina te ly offshore N ova Sc otia ,d e c lining throug h to 2035. It
d oe s notfore se e N e w Brunsw ic k sha le re sourc e s b e ing d e ve lopm e ntb a se d upon c urre nt
c osta sse ssm e nts a nd c om pe ting sha le pla ys [na m e ly U.S.M a rc e llus.a nd Utic a ].24 Und e r
ICF’sBa se Ca se ,M a ritim e sCa na d a w illre c e ive itsg a sfrom d e c lining M a ritim e sprod uc tion,
LN G im portflow s from Ca na portLN G a nd g a s from the M a rc e llus m oving northw a rd on
M & N P onc e the pipe line ha sre ve rse d itsflow from N orth-South toSouth-N orth.
DufourEne rg y w ould note ICF’sBa se Ca se fore c a stofCa na portLN G provid ing sig nific a nt
b a se loa d g a sto M a ritim e sCa na d a ove rthe fore c a stpe riod isa low prob a b ility outc om e .
The re a re c urre ntly pipe line b ottle ne c ks c a using w inte r pric e spike s a t Dra c ut.This
provid e sa n opportunityforCa na portLN G d od e live rintothism a rke t,m ostlyinthe w inte r.
21 The
Future of natural Gas Supply for Nova Scotia, ICFConsulting Ca na d a ,Inc .Pre pa re d for the N ova
Sc otia De pa rtm e ntofEne rg y,M a rc h 2013,pa g e 30
22 The Future of natural Gas Supply for Nova Scotia, ICFConsulting Ca na d a ,Inc .Pre pa re d for the N ova
Sc otia De pa rtm e ntofEne rg y,M a rc h 2013,pa g e 30
24 The Future of natural Gas Supply for Nova Scotia, ICFConsulting Ca na d a ,Inc .Pre pa re d for the N ova
Sc otia De pa rtm e ntofEne rg y,M a rc h 2013,pa g e 35
12
H ow e ve r, se ve ra l pipe line e xpa nsion proje c ts w ill m ove M a rc e llus sha le g a s to Dra c ut
re m oving this b ottle ne c k b y 2018.W ith the se pipe line e xpa nsions,itis unlike ly offshore
sourc e d LN G w illc om pe te w ith U.S.N orthe a stsha le pla y pric e sa sb a se loa d g a sove rthe
fore c a stpe riod .H ow e ve r,Ca na portLN G m a y se rve a sa w inte rpe a king supply,b uta g a in
w ould ha ve to c om pe te w ith loc a lly prod uc e d supplie sa fte rinfra struc ture c onstra intsa re
e lim ina te d .
Und e rthe irBa se Ca se fore c a st,ICFnote sthe ne e d forinc re a se pipe line c a pa c ity to m ove
M a rc e llus g a s north into N e w Eng la nd a nd M a ritim e s Ca na d a to re pla c e the d e c lining
M a ritim e s prod uc tion.The M & N P syste m w a s d e sig ne d a nd b uilt to b e re ve rsib le .The
que stion ICFra ise s is w hic h pa rtie s w ill c ontra c tfor this c a pa c ity re ve rsa l.ICFfurthe r
note s tha tifthe M & N P pipe line is re ve rse d ,the re w ill still b e a ne e d to m ove g a s from
fa rthe rupstre a m tothe Dra c utpointon M & N P.Thism e a nspa rtie sw illha ve toc ontra c tfor
ne w pipe line c a pa c ityonsom e ofthe e xpa nsionproje c tstha tw illd e live rtoDra c ut.
The re a re m ultiple pipe line proje c tsfoc use d on b ring ing M a rc e llusa nd Utic a Sha le supplie s
into the N orthe a stU.S.m a rke t,w he re the M & N P syste m w ill re c e ive the g a s a tDra c ut.
The se proje c ts he lp to furthe r inc re a se re g iona l na tura l g a s c a pa c ity, d e live ra b ility,
fle xib ility a nd re lia b ility, a s w e ll a s provid e e c onom ic b e ne fits to the re g ion. M ost
im porta ntly,the yprovid e e va c ua tion pa thsforthe inc re a sing supply ofna tura lg a sc om ing
from the M a rc e llusa nd Utic a sha le b a sins.
25The
proje c tsund e rc onstruc tion orpropose d a re show ninthe g ra phic b e low .
25 Sourc e d
13
from N a tura lGa sInte llig e nc e
N ote :26
Und e rthe ICFBa se Ca se fore c a st,M a ritim e sCa na d a w illha ve a c c e sstona tura lg a sthroug h
e xisting , b ut d e c lining , prod uc tion in M a ritim e s Ca na d a , Ca na port LN G supply a nd
inc re a se d M a rc e llusg a sprod uc tion d e live re d to Dra c ut.De pe nd ing upon N orth Am e ric a n
pric ing a nd w orld LN G pric e s,the e xpe c ta tion w ould b e for M a ritim e s Ca na d a to sourc e
m ore a nd m ore ofitsg a sfrom the M a rc e llusb a sind ue tothe pric e a d va nta g e ove rLN G.
The conclusions reached are:
a) Maritimes Canada will have access to natural gas in the quantities necessary
to meet forecasted demand. These sources of gas will come from Maritimes
Canada and, to a greater extent as time progresses, the Northeast U.S.
b) Maritimes Canada will continue to have access to market based pricing for
natural gas, adjusted for transportation costs from the particular supply basin
accessed. The market based pricing will be open access and highly visible to
market participants as it currently is.
c) Maritimes Canada gas resources will remain undeveloped in the forecasted
price environment.
26 M a p
pre pa re d b y inform a tion from N a tura lGa s Inte llig e nc e .M a p d oe s notinc lud e the la te sta nnounc e d
pipe line proje c tb y Spe c tra Ene rg y c a lle d “Atla ntic Brid g e ” w hic h w illd e live rg a sfrom the Alg onquin syste m
to Dra c utw ith a proje c te d in se rvic e d a te of2018.The m a p a lso d oe s notinc lud e the a d d itiona l pipe line
proje c tha sb e e n a nnounc e d b y Te nne sse e Ga sPipe line c om pa ny c a lle d the TGP Conne c torw hic h w illd e live r
up to 1.2 Bc f/d a y onto its syste m a t W rig ht,N e w York w hic h w ould the n b e d e live re d to Dra c ut on its
N orthe a stExpa nsionProje c t.
14
Atlantic Canada Forecast, With Goldboro LNG Project
W ith the a d d ition of the Gold b oro LN G fa c ility, the M a ritim e s Ca na d a re g ion w ill se e
e xpe c te d g a sflow inc re a se sfrom a pproxim a te ly0.2 Bc f/d toa fore c a stm a xim um ofa b out
1.6 Bc f/d onc e the proje c tb e g insope ra tion in 2019/2020 tim e fra m e .Thisinc re a se in flow
w ould b e re fle c te d on the M & N Ca na d a pipe line syste m in the ir e ntire ty.The M & N US
pipe line syste m w ould se e m a xim um flow sinthe ra ng e ofa b out1.0 Bc f/d .
Assum ptionsforthisfore c a stinc lud e :
a ) The M & N P syste m is re ve rse d to physic a lly flow g a s north from Dra c utto
Gold b orow he re the fa c ilityw illb e loc a te d fe e d ing m a rke tsinb e tw e e n.
b ) M & N P a d d sa d d itiona lc om pre ssion tothe irsyste m tod e live rup to1.0 Bc f/d
from the M & N U.S.syste m intothe M & N Ca na d a syste m a nd d e live rup to1.6
Bc f/d on the M & N Ca na d a syste m .(Pieridae has indicated that these would be
the maximum deliveries possible associated with the project, and are subject to
final commercial negotiations with counterparties)
c ) U.S.b a se d pipe line proje c ts w hic h a re c urre ntly und e r d e ve lopm e nt w ill
d e live rne w g a ssupplie sto the Dra c utinte rc onne c ton M & N US a re b roug ht
intose rvic e onsc he d ule .
d ) Pie rid a e w ill c ontra c t for c a pa c itie s on the upstre a m pipe line proje c ts to
d e live rg a stothe Dra c utinte rc onne c t.
e ) LN G pric e sc ontinue to offe rsuffic ie ntne tb a c ksforM a ritim e sCa na d a b a se d
re se rve s a nd a s a re sult, the re is sig nific a ntly inc re a se d d e ve lopm e nt of
re se rve sin M a ritim e sCa na d a .
The g a sd e m a nd a nd g a ssupplyfore c a stisshow ninthe ta b le b e low :
Maritimes Canada
Goldboro LNG
Total
Demand
MMcf/d
200
1,452
1,652
Supply
MMcf/d
Canada Off Shore
300
Canada On Shore
400
US Based (Dracut)
952
Total
1,652
Note: Pieridae states the ultimate production from the Goldboro LNG facility and subsequent
gas supply are subject to commercial negotiations among counterparties. The table assumes
the maximum requirements and the expected Maritimes Canada demand, as per the ICF Base
Case forecast.
The la rg e stc ha ng e in fore c a sts b e tw e e n the c a se s W ith a nd W ithoutthe Gold b oro LN G
fa c ility isthe va ria nc e in prod uc tion ofM a ritim e sCa na d a g a sb oth offshore a nd onshore .
The Proje c t’sd e m a nd re sultsin inc re a se d M a ritim e sCa na d a prod uc tion from the hig he r
ne tb a c ks pric e s a c hie va b le . It is im porta nt to note tha t M a ritim e s Ca na d a g a s supply
sourc e s re m a in the sa m e w ith or w ithout the Proje c t a nd M a ritim e s Ca na d a m a rke ts
m a inta in a c c e sstoa llsupplysourc e s.
15
LN G pric e shistoric a llyte nd e d tob e ord e rsofsize la rg e rtha n d om e stic N orth Am e ric a n g a s
pric e s.W hile future pric e s w ill va ry,w ith N orth Am e ric a ’s re la tive ly low c ostsha le g a s,
e xpe c ta tions a re N orth Am e ric a w illa lw a ysb e a tthe b ottom ofthe pric e sta c k forw orld
g a spric e s.The U.S.EIA,N EB a nd ICFg a spric e fore c a stsra ng e a round $4.00 to $6.00 pe r
M M Btu ove r the ir fore c a stpe riod s.Ove r this sa m e pe riod ,Dufour Ene rg y fore c a sts LN G
pric e s in the ra ng e of$13.00 to $16.00 pe r M M Btu,a ssum ing $100 pe r b a rre l w orld oil
pric e s.27W ithoutc om m e nting on the pa rtic ula rc om m e rc ia la rra ng e m e ntsforthe Proje c t,
the se pric e d iffe re ntia lsw illinc e ntivise prod uc tion in M a ritim e sCa na d a c om pa re d to the
fore c a stW ithoutthe Proje c t.
The Proje c t,a titsm a xim um c a pa c ity,w illuse a pproxim a te ly 10.5 Tc fofg a sove rthe te rm
ofthe re que ste d lic e nc e .Pla ns a re for no m ore tha n 7.3 Tc fofthe tota l 10.5 Tc fb e ing
im porte d from the U.S.Thisre sultsin b e tw e e n 3.2 Tc fa nd 5.0 Tc fofg a sfe e d stoc k from g a s
sourc e sin M a ritim e sCa na d a .The N EB fore c a ste stim a te sa re tha tthe re isa pproxim a te ly
1,093 Tc fofm a rke ta b le re se rve sre m a ining in Ca na d a a nd oftha t,91 Tc fofre se rve sre sid e
inthe M a ritim e sCa na d a re g ion.ICF’se stim a te b e ing a pproxim a te ly75 Tc f.
Dufour Energy can therefore conclude the export of between 3.2 to 5.0 Tcf of
Canadian gas production over the licence period will not restrict the access to
natural gas of Canadians, in general, or Maritimes Canada more specifically. It will
also not restrict access to gas markets.
Ga ssupply a nd d e m a nd d yna m ic sha ve c ha ng e d d ue to the sha le g a sre volution in the U.S.
a nd Ca na d a . As the se ne w sourc e s of supply ha ve e m e rg e d , ne w pipe line s a nd
infra struc ture ha ve ora re b e ing c onstruc te d to m a na g e thisre sourc e .In c e rta in c a se sfor
Ca na d a ,the ne w U.S.supplyha s"b a c ke d out"supplyforCa na d a ’stra d itiona lm a rke ts.This
ha s re sulte d in Ca na d ia n supply se a rc hing for ne w m a rke ts, of w hic h LN G is a prim e
pote ntia l.
Prod uc e rsc ontinua llym ove sc a rc e c a pita ltosupplyb a sinse a rning the hig he stre turnsa nd
a b a nd on supply a re a stha tc a nnotc om pe te form a rke ts.The re sultisprod uc tion g row sin
the se m ore c om pe titive b a sinsa tthe e xpe nse ofhig he rc ost(low e rne tb a c k) a re a s.Ove ra ll,
N orth Am e ric a n m a rke tsw illc ontinue to a lloc a te g a ssupply to m a rke tsb a se d on m a rke t
pric e sa nd pric ing d iffe re ntia ls.
The conclusions reached for the Maritimes Canada, with the Goldboro LNG Project
are:
a) The Project will not restrict the amount of gas that Canadians would be able to
access at market pricing.
b) The Project will not restrict the amount of gas the Maritime Canada region
would otherwise be able to access at market pricing.
27Ba se d
16
uponhistoric a lLN G pric ing ofa 13% to16% ofBre ntCrud e oilorJCC ind e xre fe re nc e s.
c) The usage of between 3.2 and 5.0 Tcf of Canadian sourced gas verse the
estimated gas reserves of 1,093 Tcf in Canada and 91 Tcf in the Maritimes
Canada region means there will still be significant reserves available to
Canada and Maritimes Canada with the Project foreseeable future.
d) The Project will have a beneficial effect by reinforcing on the natural gas
infrastructure in the Maritimes Canada region. The Goldboro LNG project, if
commercially contracted to its maximum capacity, will represent the single
largest point specific gas customer in Maritimes Canada.
NEB ASSESSMENT OF SURPLUS
Forpurpose softhisre vie w ,LN G Ca na d a ista ke n to b e the m ostre c e ntg uid a nc e for
LN G lic e nc e a pplic a nts.The N a tiona l Ene rg y Boa rd Ac tw a s a m e nd e d b y the Job s,
Grow th a nd Long -te rm Prospe rity Ac tin June of2012.W ith the se a m e nd m e nts,the
N EB'svie w isitm a y onlyc onsid e rthe "surplus"c rite rion c onta ine d in se c tion 118 to
the re vie w ofa n a pplic a tion fore xportofna tura lg a s.LN G Ca na d a De ve lopm e ntInc .
("LN G Ca na d a "),w a sthe firste xportlic e nc e a pplic a tion d e c ision a fte re na c tm e ntof
the Job s,Grow a nd Long -te rm Prospe rityAc ta nd the Boa rd foc use d itsa sse ssm e nton
the "surplus"c rite rionc onta ine d inse c tion 118 ofitsAc t.
Conc lusions from the LN G Ca na d a d e c ision inc lud e d the N EB’s e va lua tion w he the r
the na tura l g a s propose d to b e e xporte d w a s surplus to re a sona b ly fore se e a b le
Ca na d ia n re quire m e nts.Pa rtofthise va lua tion w a sre c og nition the inte g ra te d N orth
Am e ric a n g a sm a rke tsa nd the c a pa b ility ofthe re sourc e b a se from w hic h Ca na d ia n
d e m a nd a nd the propose d e xportsc ould b e re a lise d .
Sinc e the LN G Ca na d a 'sa pplic a tion (July27,2012) uptoa nd inc lud ing the pre se nt
a pplic a tion b yPie rid a e ,the N EB ha sre vie w e d num e rousLN G e xporta pplic a tions.
The N EB ha sa pprove d LN G e xporta pplic a tionsw ith Ca na d ia ng a susa g e le ve ls
c onsid e ra b lyhig he rtha ntha ta pplie d forb yPie rid a e Ene rg y(Ca na d a ) Ltd .The se
a pprova lsw e re b a se d uponthe surplusd e te rm ina tion pursua nttose c tion118 ofits
Ac t.
Pieridae’s specific analysis provides support sufficient for the NEB to make a
surplus determination pursuant to section 118 in response to Pieridae’s import
and export licence application.
SURPLUS STATUS
The N EB’se va lua tion ofw he the rthe na tura lg a spropose d tob e e xporte d is"surplus"
w ithin the m e a ning of N EB Ac t se c tion 118 for LN G Ca na d a ’s a pplic a tion ha d a
num b e rofc om pone nts.
17
1. Re c og nition tha tCa na d ia n na tura lg a sre quire m e ntsa re m e tw ithin a N orth
Am e ric a n m a rke t, w hic h is a n inte g ra te d one : The c ontine nta l m a rke t is
inte g ra te d physic a lly b y its pipe line ne tw orks, politic a lly b y Fre e Tra d e
Ag re e m e nts,c om m e rc ia llyb ytra d ing syste m sa nd c ontra c tua lre la tionships.
2. N orth Am e ric a n g a s supply a nd d e m a nd a d justs to c ha ng e s in pric e sig na ls.
This is a tte ste d to b y the N EB’s ow n prod uc tion fore c a st ra ng e of H ig h,
Re fe re nc e a nd Low – w ith the d e te rm ining va ria b le b e ing the e xpe c te d g a s
pric e .28
3. The g a s m a rke t is w e ll supplie d in Ca na d a , Atla ntic Ca na d a a nd N orth
Am e ric a n w id e . The prim a ry re fle c tion ofthis is g a s pric e s the m se lve s.Ga s
pric e s in N orth Am e ric a ha ve d e c line d sig nific a ntly a s the sha le g a s b oom
b e g a n to hitthe m a rke ts.W hile shortte rm fluc tua tionsin pric e sc a n oc c ura s
the re sultofw e a the r or pa rtic ula r infra struc ture c onstra ints.The follow ing
pric e g ra phic show sthe forw a rd pric e sforg a sa sre pre se nte d b y the N YM EX
future sc ontra c tforna tura lg a s.The pric e c urve sre pre se ntthe pric e sforthre e
tim e pe riod s,c urre nt,thre e ye a rsa g oa nd 6 ye a rsa g o.The c ha rtc le a rlyshow s
inc re a se d supply forc ing d ow n pric e s ove r tim e .This supply ha s b e e n so
e ffe c tive in re d uc ing pric e stha tisha sm a d e pre viously a ttra c tive re se rve sin
M a ritim e sCa na d a una b le toa ttra c tc a pita lfrom furthe rd e ve lopm e nt.
N ote :29
4. The re isg e ne ra la g re e m e nttha tthe N orth Am e ric a n g a sm a rke tisthe w orld 's
la rg e stfunc tioning one .Ind ustrypa rtic ipa ntsprovid e a c c ura te pric e d isc ove ry
Canada’s Energy Future 2013, Energy Supply and Demand Projections to 2035, N a tiona lEne rg y Boa rd ,
N ove m b e r2013
29 Sourc e : Bloom b e rg , N YM EX na tura l g a s historic a l forw a rd pric e s c urve s a t 3/10/2014 (ora ng e ),
3/10/2011 (g re e n),a nd 3/10/3008 (b lue ).
28
18
w ith a hig h d e g re e oftra nspa re nc yofpric e s,prod uc tion,tra nsm ission,stora g e
a nd c onsum ption.
5. Ga sm a rke tb uye rsa nd se lle rsha ve a la rg e num b e rofoptionsforse c uring g a s
supplie s,sa le sa nd a c c e sstore la te d se rvic e ssuc h a sstora g e ,tra nsm ission a nd
fina nc ia lhe d g ing .
6. Pie rid a e isw e lla w a re ofthe a va ila b le optionsto ob ta in g a ssupply re la te d to
the ir proje c t.Pie rid a e inte nd s to a c quire g a s throug h a m ixture of e quity
supply (re sulting from the a c quisition ofupstre a m re sourc e s) a nd third -pa rty
supply a c hie ve d throug h ope n m a rke tpurc ha se s und e r b oth long -te rm a nd
short-te rm c ontra c ts.
SUMMARY
This re port ha s re vie w e d e stim a te s ofU.S.,Ca na d ia n a nd Atla ntic Ca na d a ’s na tura l g a s
supply, d e m a nd , a nd inte r-re g iona l flow fore c a sts.This re vie w ha s ta ke n into a c c ount
Pie rid a e 'sa pplie d -forlic e nc e toim portup to1 Bc f/d ofna tura lg a sfrom the N orthe a stU.S.
a nd to e xportup to 10 m illion tonne spe rye a r(a b out1.4 Bc f/d ) ove rthe re vie w pe riod .
Dufour Ene rg y's m a in c onc lusions c onc e rning d e m a nd , supply, a nd the Gold b oro LN G
im pa c tson m a rke td yna m ic sd uring the pe riod a re a sfollow s:
1. N orth Am e ric a n a nd Ca na d ia n g a s re sourc e s a re e xpa nsive .Re se rve s ha ve
inc re a se d sub sta ntia lly w ith the d e ve lopm e nt of horizonta l d rilling a nd
m ulti-sta g e fra c ture te c hnolog ie s.The re is no re a son to e xpe c t tha t this
g row th pa tte rn w ill not c ontinue into the future a nd tha t a d d itiona l
te c hnolog ic a l a d va nc e s w ill inc re a se e c onom ic a lly a va ila b le re se rve s to
Ca na d a ,Atla ntic Ca na d a a nd N orth Am e ric a in g e ne ra l.
2. Ca na d a ,Atla ntic Ca na d a a nd the N orthe a stUnite d Sta te sha ve prod uc tive g a s
pote ntia l fa r in e xc e ss of proje c te d d e m a nd of the Proje c t a nd fore c a ste d
c onsum ptionove rthe lic e nc e pe riod .
3. N a tura l g a s m a rke ts w ill c ontinue to func tion ove r the fore c a stpe riod w ith
na tura lg a sb uye rsa nd se lle rse sta b lishing fa irm a rke tpric e sb a se d on supply
a nd d e m a nd fund a m e nta ls in Ca na d a ,Atla ntic Ca na d a a nd N orth Am e ric a in
g e ne ra l.
4. The im pa c t on the pric e of na tura l g a s from the propose d Proje c t w ill b e
m ute d b ythe a b und a nc e ofre a sona b lylow c ostsupplya va ila b le tom a rke tsin
N orth Am e ric a ing e ne ra la nd Ca na d a a nd Atla ntic Ca na d a spe c ific a lly.
5. Pie rid a e ’sProje c tw illin a lllike lihood inc re a se the infra struc ture c a pa b ilitie s
in M a ritim e s Ca na d a , w hic h w ould b e a va ila b le to d e live r g a s a nd m a na g e
se a sona ld e m a nd va ria tionsfora llm a rke tpa rtic ipa nts.The inc re a se d volum e s
of g a s m a y re d uc e the ove ra ll unit c osts for g a s to a ny pa rtic ula r m a rke t
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pa rtic ipa ntin M a ritim e s Ca na d a .The Gold b oro LN G proje c t,ifc om m e rc ia lly
c ontra c te d to its m a xim um c a pa c ity, w ill re pre se nt the sing le la rg e st point
spe c ific g a sc ustom e rin M a ritim e sCa na d a .
6. Atla ntic Ca na d a g a sre sourc e sfa c e sig nific a ntc om pe tition a nd d ispla c e m e nt
from w ha tw a sthe irtra d itiona lm a rke tsin the N orthe a stUnite d Sta te s.This
c om pe tition ha sa lre a d y m ute d g a sre sourc e e xplora tion a nd d e ve lopm e ntin
the Atla ntic Ca na d a re g ion.Pie rid a e ’s Proje c t w ill provid e a m a rke t for
M a ritim e sCa na d a g a s,furthe ring d e ve lopm e nt,tha n w ould othe rw ise b e the
c a se ifM a ritim e s Ca na d a re sourc e ’s only d ire c tm a rke tw a s the N orthe a st
U.S.
7. Dufour Ene rg y c onc lud e s the im port of na tura l g a s a nd the e xport ofLN G
propose d b y Pie rid a e w illnotc a use Ca na d ia ns in g e ne ra lorAtla ntic Ca na d a
spe c ific a lly a ny d iffic ulty in m e e ting the ir na tura l g a s re quire m e nts a t fa ir
m a rke tpric e sove rthe lic e nc e pe riod .
8. H a ving re vie w e d the fore c a sts,DufourEne rg y c onc lud e sthe re sourc e b a se is
la rg e ,tha tm a rke tsa re func tioning e ffic ie ntly a nd w illc ontinue to d o so.The
qua ntity ofg a s a pplie d to b e e xporte d b y Pie rid a e w illha ve little im pa c ton
prod uc tion,pric e sorc onsum ption a nd m e e tsore xc e e d sthe “SurplusTe st” for
g a sre m a ining a fte rd ue a llow a nc e ha sb e e n m a d e forre a sona b ly fore se e a b le
re quire m e ntsforuse in Ca na d a ,ha ving re g a rd totre nd sin the d isc ove ryofg a s
inCa na d a a nd N orth Am e ric a .
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