As Canada’s eastern natural gas storage and trading hub put an expansion into action on its 75th anniversary, a surge of western production began flowing Wednesday with a boost from a deep cross-country pipeline toll cut.
Union Gas announced the start of service by C$622.5 million ($498 million) in additions to the Dawn Hub in southern Ontario. The facilities raised capacity by 400 MMcf/d, completing a 1.2 Bcf/d package of pipe and compressor facilities built for C$1.5 billion ($1.2 billion) since 2015.
Total capacity of the Dawn complex and connected Union lines known as Parkway rose to 7.5 Bcf/d.
The Union network, integrated with TransCanada Corp.’s national Mainline, relays gas across Ontario and Quebec and to links into the northeastern United States. The traffic also includes Canadian imports of U.S. gas from Appalachia that have fetched more than C$50 billion ($40 billion) for American exporters since the onset of unconventional production 10 years ago.
TransCanada reported cross-country deliveries of Alberta and British Columbia (BC) gas began on schedule Wednesday using the new bargain toll, Dawn Long-term Fixed Price (LTFP).
The deal grants a 46% discount for 10 years, down to C 77 cents/gigajoule (65 cents/MMBtu), to 23 producers that bought shipping contracts for 1.4 Bcf/d.
TransCanada management described the arrangement as “taking advantage of existing Canadian pipeline infrastructure so they (the 23 capacity subscribers) can maintain their competitive edge at Ontario’s Dawn Hub.”
More initiatives are in the works to support Alberta and BC gas sales across North American markets.
“In addition to the LTFP deal, by 2020 we expect to facilitate the additional delivery of approximately one Bcf/d to key markets,” management said.
“We know our customers are facing new competitive challenges, and we are working with them to find solutions so we can all share in the long-term success of the Western Canada Sedimentary Basin,” said TransCanada Vice President Tracy Robinson.
At Union’s southern Ontario headquarters in Chatham, the eastern Canadian storage and trading network was described as wide open to all comers regardless of production nationality.
“With the emergence of abundant, affordable supplies located close to Ontario in areas such as Pennsylvania and Ohio, the demand for natural gas transportation along the Dawn-Parkway System continues to increase," said Union President Steve Baker.
Union’s “investments, in conjunction with related infrastructure projects by Enbridge Gas Distribution and TransCanada east of Parkway, provide eastern Canadian and U.S. Northeast markets with increased access to the Dawn Hub and Appalachian supplies.”
The new Union facilities and TransCanada’s toll bargain are the latest stages in a long evolution. Union recited the network’s genesis and growth for 75 years so far.
“On Oct. 28, 1942, natural gas was injected into a naturally occurring, depleted pinnacle reef formation at Dawn, marking the birth of Canada's first commercially successful underground storage pool,” Union said.
“Dawn is now Canada's largest integrated natural gas storage facility and an integral part of North America's gas infrastructure. Over 100 companies actively buy and sell natural gas at Dawn making it the second-most physically traded hub in North America.”