Goldboro LNGU.S. REGULATORY

U.S. Regulatory

On May 22, 2015, the Department of Energy of the United States (the “U.S. DOE”) issued an order (“Order No. 3639”) granting Goldboro LNG Limited Partnership II authorization to export annually, by pipeline, up to 292 Bcf of natural gas sourced from the United States to Canada for end use in Canada or, after liquefaction in Canada, to export, by vessel, the LNG produced from such natural gas to countries with which the United States has a free-trade agreement. This authorization is for a period of twenty years commencing on the earlier of date of first export and May 22, 2022.

On February 5, 2016, the U.S. DOE issued an order (“Order No. 3768”) granting Goldboro LNG Limited Partnership II, authorization to export annually, using the capacity of the U.S. portion of the M&N Pipeline that is in service as of February 5, 2016, up to 292 Bcf natural gas sourced from the United States to Canada for liquefaction in Canada and re-export as LNG to countries with which the United States does not have a free-trade agreement. This authorization is for a period of twenty years commencing on the earlier of the date of first commercial re-export and February 5, 2023. The volume of natural gas that is authorized for export under Order No. 3768 is not additive to the volume of natural gas that is authorized for export under Order No. 3639.

The regulatory history of the applications made by Goldboro USA LP, including a copy of Order No. 3639 and Order No. 3768, can be accessed at here. Both Order No. 3639 and Order No. 3768 are subject to certain reporting requirements and other conditions including the requirement to comply with the U.S. DOE’s Procedures for Change in Control Affecting Applications and Authorizations to Import or Export Natural Gas (79 FR 65541).

On December 18, 2015, Goldboro LNG Limited Partnership II applied to the Assistant Secretary for Fossil Energy of the U.S. DOE to approve the change of control of it occasioned by the acquisition by ORLEN Upstream Canada Ltd. of all of the issued and outstanding shares in the capital of Kicking Horse Energy Inc. which, at that time, owned (indirectly through KCK Atlantic Holdings Ltd.) approximately 10.77% of the issued and outstanding shares in the capital of Pieridae. On November 23, 2016, the U.S. DOE notified Pieridae USA that the request for approval of the change in control is granted.

On May 21, 2017, Goldboro LNG Limited Partnership II applied to the Assistant Secretary for Fossil Energy of the U.S. DOE to approve the change of control of it occasioned by the proposed amalgamation of Pieridae Energy Limited and Pétrolia Inc. pursuant to the Arrangement. This application remains outstanding at this time.

On August 30, 2016, the U.S. DOE promulgated the Revised Procedures Affecting Applications and Authorizations for the In-Transit Movement of Natural Gas (81 FR 59436) which clarify that in-transit shipments of natural gas are not “imports” or “exports” within the meaning of section 3 of the Natural Gas Act (15 U.S. Code Chapter 15B). Goldboro LNG Limited Partnership intends to rely on, and to comply with, these procedures in respect to possible shipments of natural gas by pipeline from Western Canada through portions of the United States en route to the Goldboro LNG Facility. For these purposes an “in-transit” shipment of natural gas includes a shipment of natural gas from Canada that only temporarily passes through the United States before returning to Canada.