Saint John, New Brunswick, Canada

National Energy Board Panel Session – Tuesday, August 9th, 2016, 1:00 – 4:30 p.m. Location: Saint John, New Brunswick, Canada

Energy East Pipeline Ltd. & TransCanada PipeLines Limited Energy East Project and Asset Transfer, and Eastern Mainline Project

File OF-Fac-Oil-E266-2014-01 02 Hearing Order OH-002-2016

Mr. A. David Seely Mr. Michael D. Blackier Legal/Control & Resources Manager Legal Counsel Canaport LNG Limited Partnership Canaport LNG Limited Partnership 2530 Red Head Road, 2530 Red Head Road, Saint John, New Brunswick, Saint John, New Brunswick, Canada, E2L 3T5 Canada, E2L 3T5 [email protected] [email protected] Telephone: +1-506-638-1309 Telephone: +1-506-638-1303 Fax: +1-506-638-1335 Fax: +1-506-638-1335 Mr. Fraser Forsythe Mr. Alan L. Ross Security & Environment Manager Regional Managing Partner Canaport LNG Limited Partnership Borden Ladner Gervais LLP 2530 Red Head Road, Centennial Place, East Tower, Saint John, New Brunswick, 1900, 520 - 3rd Avenue S.W., Canada, E2L 3T5 Calgary, Alberta, Canada, T2P 0R3 [email protected] [email protected] Telephone: +1-506-638-1305 Telephone: +1-403-232-9656 Fax: +1-506-638-1335 Fax: +403-266-1395 Introduction Good afternoon members of the Board, my name is Fraser Forsythe, Security and

Environment Manager at Canaport LNG Limited Partnership (“CLNG”) and I appear before you today to present CLNG’s statement and questions regarding the Energy East Project and Asset

Transfer, and Eastern Mainline Project (the “Project”) to Energy East Pipeline Ltd. and

TransCanada PipeLines Limited (the “Proponents”). CLNG supports the National Energy

Board’s (“NEB”) hearing process and reserves its right to make further submissions on any potential NEB recommendations, decisions or conditions respecting the Project.

CLNG is a state-of-the-art liquefied natural gas (“LNG”) receiving and regasification terminal — the first and only in Canada. CLNG is located within the existing industrial area on the southeastern limits of the City of Saint John, and Province of New Brunswick, adjacent to the existing Irving Oil Canaport Oil Terminal and is approximately one kilometer from the proposed site for the Canaport Energy East marine terminal as referenced in Appendix 1, attached hereto, labeled “Proposed Jetty Location and LNG Ship Maneuver Channel”. CLNG consists of an approximately 350 meter berthing pier designed to unload LNG vessels with a capacity of up to

266,000 m3 of LNG and to load LNG on to ships with approximately 150,000 m3 capacity.

CLNG has three LNG storage tanks of 160,000 m3 capacity each, regasification facilities and associated infrastructure. CLNG has a single customer (Repsol Energy Canada Ltd.) that has contracted for the full amount of off take from the terminal. In 2014 Irving Oil Limited installed a crude oil unloading arm on CLNG’s existing LNG jetty for the loading/unloading of crude oil.

CLNG is a partnership between affiliates of Repsol, S.A. of Spain (75%) and Irving

Oil (25%) of Canada and has been fully operational since 2009. CLNG currently employs approximately 90 people, including contractors, on a permanent full time basis and continues to

Page | 2 draw on the professional services of many companies in the city to support the implementation of operational, environmental and safety programs.

CLNG also engages in upgrade projects from time to time such as the recently completed

$45 million (USD) Boil-off-Gas Compressor Upgrade Project which included investments of

$4.8 million to the benefit of local Saint John businesses and approximately $12 million in direct expenditure on labour and materials from businesses in New Brunswick. CLNG has also invested over $1.5 million into community programs, events and organizations in Saint John and the surrounding areas, over the last five years.

CLNG is recognized as critical infrastructure by the Department of Public Safety for the

Province of New Brunswick and by Public Safety Canada due to the importance of the security of supply of natural gas for power generation and heating needs in the Canadian Maritime

Provinces and the Northeastern United States. CLNG currently operates as an important peak shaving facility that gives its customer the opportunity to sell natural gas during critical peak demand times (primarily in winter months). CLNG serves as a strategic energy asset for the

Maritime energy supply chain and is one of the largest LNG storage facilities in the region (with

10 Bcf of natural gas storage capacity). Thus, characterizing CLNG as a “minor importer” underestimates the importance of CLNG to the Province and to the northeastern United States supply chain.

While CLNG is generally supportive of the Project it has three areas of concern regarding the construction and operation of the Canaport Energy East marine terminal (“MT”) and the

Saint John tank terminal (“TT”) and all related infrastructure. The three areas of concern are: (i) the Proponents’ lack of consultation with CLNG; (ii) marine impacts; and (iii) land impacts.

Page | 3 These concerns, along with CLNG’s written submissions, were pre-filed with the NEB, and served on the Proponents, their counsel, and other Intervenors in advance of today’s Panel

Session.

Canaport LNG Consultation

With respect to consultation, we note that the Proponents’ application to the NEB relies heavily on consultation with various stakeholders in communities which are impacted by the

Project. However, according to the application, CLNG was not consulted regarding its concerns.

It is foreseeable that, being in close proximity with the proposed MT and TT, CLNG would have concerns regarding the impact of the Project on CLNG’s onshore/offshore operations. Either the

Proponents could have established a standing committee comprised of key stakeholders in the region, including CLNG, in order to address these concerns, or such committee was established and CLNG was not involved. Accordingly, CLNG is participating in the Project’s NEB hearing.

Canaport LNG Marine Impact Concerns

With respect to marine impact, CLNG is concerned with potential constraints on the berthing of LNG vessels imposed by the Project.

The physical characteristics of LNG and the complexity of the technical requirements for berthing and unloading LNG vessels when compared to crude oil vessels must be considered when evaluating berthing priorities. LNG is a cryogenic liquid stored, handled and transported at minus 162°C that produces “boil-off gas” - the vapours created due to ambient heat input (while maintaining constant pressure in the storage vessel). Further, crude oil vessels calling at the MT will be without cargo as they approach the berth of the MT while LNG vessels will have LNG stored in their tanks (which will be “boiling off”, as noted above).

Page | 4 Under its Approval to Operate (“ATO”), issued on September 12, 2014, by the Minister of

Environment and Local Government for the Province of New Brunswick, pursuant to paragraph

5(3)(a) of the Air Quality Regulation – Clean Air Act, and paragraph 8(1) of the Water Quality

Regulation – Clean Environment Act, CLNG has been permitted to berth a maximum of 120 vessels per year at its terminal. An uninterrupted unloading window (the “Uninterrupted

Window”) is necessary to safely commence and complete the LNG vessel berthing, discharge and departure processes. The reason LNG vessels require an Uninterrupted Window is that such vessels are unable to perform a partial unloading due to the risk of “sloshing” (i.e. motion of the

LNG inside a partially full tank as a consequence of a vessel’s rolling and pitching in a seaway), which could result in damage to the vessel’s tanks and loss of containment of LNG. Such sloshing could result from an LNG vessel being forced to leave the berth before the planned cargo unloading has been completed. The uninterruptible nature of the unloading window is unique to LNG vessels whereas crude oil vessels have the ability to partially load/unload oil and leave for anchorage virtually at any time.

In light of the unique physical characteristics of LNG, the complex procedures to safely unload LNG and the uninterruptible nature of the LNG unloading window compared to the interruptible window for crude oil vessels, LNG vessels calling at CLNG should receive priority of berthing over crude oil vessels calling at the MT.

Canaport LNG Land Impact Concerns

With respect to land impact, one concern is the uninterrupted vehicular access to and from

CLNG’s site and the impacts of increased traffic levels on CLNG’s access roads. It is intended that the TT and MT will be constructed on land which is in close proximity to CLNG. A better

Page | 5 understanding of the Proponents’ plan for road usage and laydown areas will assist in determining the level of impact on CLNG’s existing operations as referenced in Appendix 2, attached hereto, labeled “Main Transportation Routes to Proposed Canaport Energy East

Marine Terminal”.

CLNG assumes the following questions will be answered at the August 9, 2016 Panel

Session. In the event such questions cannot be answered at that time, CLNG requests that the

Proponents respond to its questions by way of undertaking in accordance with correspondence from Proponents’ counsel dated July 12, 2016 (Hearing Document A78521).

Questions for the Proponents:

1) Canaport LNG Consideration

Questions Proponents Application 1. i. What steps have the Proponents taken to consult CLNG in order to Vol 1, properly understand the impact that the construction and operation s. 2.13 of the MT and TT may have on CLNG’s pre-existing operations? Vol 6, ii. How and to what extent are third party vessels included in the MT s. 6 Qualitative Risk Assessment? Vol 7, iii. Do the Proponents intend to create a “Standing Committee” for the s. 2, 3.5, 3.6, design, construction, and operation of the MT and TT to ensure 5, 6 affected parties, such as CLNG, are involved and their interests are taken into account (e.g. blasting activity, operational activity, Vol 8, studies regarding the Marine Terminal Shipping Risk Assessment, s. 3, 4 etc.)? If not, why? If so, would the Proponents object to CLNG being involved? If so why? Appendix 12- 7: Marine Terminal Shipping Risk Assessment (“MTSRA”) s. 3, 10.1

Page | 6 2. The Proponents state that there are “synergies” which exist between the Vol 11, MT and CLNG with respect to site location. What specifically do the s. 2.1.3 Proponents mean by “synergies” in respect of the MT and CLNG site locations and operations?

2) Marine Impact Concerns

Questions Proponents Application 1. i. Do the Proponents oppose LNG vessels having priority of berthing Vol 7, over crude oil vessels calling at MT? If so, on what grounds? s. 5.4, 5.5

ii. How do the Proponents intend to manage and mitigate the impact of MTSRA arrivals and departures from the MT on CLNG’s operations? s. 6 2. i. What is the status of any formal protocols between the Proponents Vol 7, and the Saint John Port Authority, if any? s. 5.4

ii. Will future discussions be required with the Saint John Port Authority with respect to such protocols?

ii. Do the Proponents have any reasonable objection to CLNG participating in future discussions? If so, what objection?

3) Land Impact Concerns

Questions Proponents Application 1. i. How and to what extent have the Proponents considered the Vol 6, potential increase in road traffic congestion within close proximity s. 5.3, 6.1, to CLNG? 6.4

ii. How and to what extent will road access to CLNG be impacted during construction and operation of the MT and TT?

iii. How will impediments to road traffic to the CLNG site be managed and mitigated? 2. Do the Proponents intend to use the private road at the end of Bayside drive Vol 6, shown on Appendix 2 (Main Transportation Routes to Proposed Canaport s. 5.3, 6.1, Energy East Marine Terminal) during construction and operation of the 6.4 Project in Saint John, NB? If so, how will the Proponents ensure such road is properly maintained and repaired?

Page | 7 GENERAL NOTES

Data provided on this map is not sufficient for either boundary determination or regulatory interpretation. No warranty is expressed or implied, nor anylegal liability or responsibility assumed or implied for the accuracy, completeness, or usefulness of the Geographic Information System (GIS) Data or any other data provided herein. The GIS data is illustrative only material and should not be considered for any other purpose. The data does not take the place of a professional survey and has no legal bearing on the true shape, sixe, location, or existence of a geographic feature, property line or polictial representation. Any use of this information is at the recipient's own risk. Saint John Tank Terminal Proposed Legend Irving Canaport Tank Terminal Lateral Saint John Vapor Recovery Lateral Saint John Connection Lateral Energy East Mainline !. Monobuoy 0# Navigation Light M i s p e c SMB Swing Circle B a y Canaport LNG Exclusion Zone Existing Irving Canaport Canaport LNG Exclusion Zone Tank Terminal ± 0 125250 500 Meters D e e p Canaport LNG Datum - NAD 1983 CSRS C o v e New Brunswick Stereographic Canaport Energy East Marine Terminal

Proposed ! 429 m "

New

Brunswick M i s p e c " P o i n t m 616 Project Site Prepared for:

Drawing Title Canaport LNG Jetty Proposed Jetty Location and

LNG Ship Maneuver Channel 560 m " Designed By Job No. Canaport Limited Property - 16-11710 Parcel "A" Irving Monobuoy Checked By Date Operational Maneuver Channel Restricted Access Area CC JULY 20, 2016

Drawn By Scale SML 1:20,000

B a y o f F u n d y Drawing No. 1 GENERAL NOTES

Dr ive

d a o R

d u ro P

ad Ro

ve R Co e d s ny ho H nt e A a d ±

R o 0 125250 500 a d Meters

P Datum - NAD 1983 CSRS r i v New Brunswick Stereographic a t e

Saint John R o Tank Terminal a Proposed d New Brunswick

M i s p e c B a y Project Site Prepared for:

D e e p Drawing Title C o v e Existing Irving Canaport Main Transportation Routes to Canaport Energy East Tank Terminal Proposed Canaport Energy East Marine Terminal Canaport LNG Marine Terminal Proposed Designed By Job No. Canaport LNG Jetty - 16-11710

M i s p e c Checked By Date P o i n t CC JULY 28, 2016

Drawn By Scale SML 1:20,000

Drawing No. 2