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Canadian LNG plan in legal fight over claims of patent infringement
Gary Park for Petroleum News
A consortium of Western Canadian natural gas producers that is underpinning a newly announced LNG project is faced with a court action accusing them of patent infringement.
The seven producers operating under the name of Rockies LNG and accounting for about 20% of Canada’s gas output is fighting back against the allegations, denying that it is copying expertise developed by rival Steelhead LNG.
They have submitted a statement of defenses and counterclaim in the Federal Court challenging assertion that they are planning to deploy the Steelhead designed electric-powered technology to produce LNG on floating barges for the C$55 billion Ksi Lisims LNG project on the British Columbia coast.
The Rockies statement said the Steelhead legal case, which includes a claim for C$250 million in damages, is based on “a cascade of fictions,” arguing there is nothing original about Steelhead’s purported invention.
The producer consortium accused Steelhead of failing to invent “anything” and of marketing an “imaginary LNG liquefaction and export facilities.”
Rockies said in July that it had joined forces with the Nisga’a Nation to seek environmental approval for the Ksi Lisims venture that includes plans for floating LNG liquefaction and export facilities.
Rockies said Steelhead’s lawsuit is “improper, frivolous, vexatious and an abuse of process” and claims Steelhead exists only on paper, without any tangible assets to convert into liquefied gas.
Steelhead stopped progress Since it was founded 8 years ago, Steelhead has stopped progress on two of its own LNG plans for Vancouver Island.
However, Steelhead did obtain a patent from the Canadian Intellectual Property Office in November 2020.
As part of its suit, Rockies is seeking a declaration that the patent is invalid and claiming that it has suffered damages stemming from business actions by Steelhead that have been “malicious, improper and illicit.”
Led by Birchcliff Energy and ARC Resources, Rockies LNG members include Advantage Oil & Gas, Peyton Exploration & Development, NuVista Energy, Paramount Resources and Bonavista Energy.
Rockies, which has hired Houston-based Western LNG as a technical consultant, said that “at all material times, the defendants had the means to make, construct, use, sell, offer for sale, design, develop and/or marketing a competing LNG project via other readily available and accessible non-infringing means.”
Earlier this year, ARC acquired Seven Generations Energy for C$2.7 billion. Before that transaction Seven Generations said in a regulatory filing it had invested C$25.8 million and made other commitments for a 24.4% stake in Steelhead, but later wrote down C$14.4 million of that investment. ARC owns a small share of Steelhead.
Steelhead told the Globe and Mail it had spent “tremendous” amounts of time and effort to design its floating facility and would continue to aggressively protect its patented work from any unauthorized use, claiming that the Ksi Lisim LNG plan was based on a design protected by Steelhead.
- GARY PARK
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