Canada regulator says no federal scrutiny needed for LNG project gas pipeline

TC Energy Corp’s proposed Coastal GasLink pipeline to supply the LNG Canada project in northern British Columbia is not subject to federal regulation, Canada’s National Energy Board (NEB) said on Friday.

The decision means the 670-kilometer-long (416 miles) natural gas pipeline will not have to submit a new application for approval and cuts the risk of extra regulatory scrutiny delaying construction.

Once built, Coastal GasLink will run from Dawson Creek in the northeast of the province to the proposed C$40 billion liquefied natural gas facility near Kitimat on the Pacific coast.

LNG Canada was approved last year by Royal Dutch Shell and its partners, to the relief of many in Canada’s beleaguered oil and gas industry. The sector has struggled to advance new energy projects in recent years because of fierce opposition from environmentalists and indigenous groups as well as regulatory delays.

The NEB received an application last year from environmental consultant Michael Sawyer who argued British Columbia did not have jurisdiction to approve Coastal GasLink because it will link to the NGTL pipeline system in Alberta and bring natural gas across the provincial border.

In Canada interprovincial pipelines fall under federal regulation. Coastal GasLink has been authorized and is regulated by the British Columbia Oil and Gas Commission (BCOGC).

In its decision the NEB said Coastal GasLink does not fall within its jurisdiction because it “does not form a part of the NOVA Gas Transmission Ltd. (NGTL) System, and is not vital or integral to it or any other federally regulated pipeline”.

TC Energy did not immediately respond to a request for comment, but Wood Mackenzie analyst Dulles Wang said the ruling was good news for the pipeline company and LNG Canada.

“Coastal GasLink is an integral part of LNG Canada and pipeline development is key for the timing of the project coming online,” Wang said. “That (pipeline development) has always been viewed as one of the biggest risk factors and this decision clears that up.”

LNG Canada is expected to start producing liquefied natural gas by 2023, Wang said.