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Rival TransCanada, Enbridge Natural Gas Pipeline Projects in Turf Fight

Pipeline competition on the natural gas transportation growth market in northern British Columbia (BC) is heating up to a boil that makes construction crews liable to bump into each other working on rival projects.

Prospects of a collision arose when Enbridge Inc.’s BC network, Westcoast Energy, revealed the route for a C$564.5 million ($452 million) addition for Montney Shale gas traffic, the Spruce Ridge Program, to move 400 MMcf/d.

TransCanada Corp.’s BC and Alberta grid, Nova Gas Transmission Ltd. (NGTL), fired off a protest to the National Energy Board (NEB), saying it already staked the same path for its C$1.4 billion ($1.1 billion) North Montney Mainline (NMML) proposal for 1.5 Bcf/d.

NGTL claims priority because the NEB previously approved NMML as a supply line for the defunct Pacific Northwest liquefied natural gas export terminal project and now only seeks permission for a “variance” to be built as BC-Alberta grid addition.

Westcoast’s Spruce Ridge route “would be directly over top of the approved footprint -- temporary workspace -- reserved for the construction of a portion of the North Montney Mainline,” said NGTL.

The proposed Westcoast pipe “overlaps with approximately 4 kilometers of the approved NMML corridor. The routing proposed by Westcoast would significantly impede NGTL’s ability to construct,” said the protest.

The pipelines are threading across sensitive terrain west of the Alaska Highway in the Fort St. John region, where the landscape is studded with aboriginal tribes, fiercely independent homesteaders and critical conservationists.

NGTL added that discussions are underway to try resolving the northern pipeline turf battle privately. But the protest formally serves notice that the conflict is liable to surface in regulatory proceedings now beginning on the Westcoast project.

The NEB, meanwhile, has decided against trying to turn down the temperature of the rivalry between the western gas supply collection arms of TransCanada and Enbridge by holding an inquiry into creating a standardized toll regime for both.

The Westcoast and NGTL systems evolved separately as provincial networks. But TransCanada’s C$14 billion ($11.2 billion) takeover of NGTL, followed by transfer of jurisdiction over the network to the NEB from Alberta enabled, it to spread into BC using a toll regime that Westcoast and its supporters, including western U.S. gas buyers, call unfair.

After reviewing toll conflicts that have prolonged pipeline approval cases since the Montney formation emerged as Canada’s strongest competitor against U.S. shale gas, the NEB agreed, “Northeast BC presents regulatory challenges.”

The issues “should be examined,” added the NEB. “However, the board is concerned that holding an inquiry would introduce undue uncertainty to the Northeast BC supply basin and may not effectively resolve these potential issues.”

Rather than try to resolve conflicts with a single inquiry, the NEB laid out requirements for the pipeline factions to support their facilities addition plans with more information about project financial structures and consequences.

Montney gas producers that the rival pipelines court to become customers have registered no objections to the NEB ruling, which vows “to ensure that issues related to fair competition are addressed.”

Among BC supply developers, Black Swan Energy, for instance, subscribes to proposed delivery capacity on both NGTL and Westcoast. A company submission to the NEB, supporting the Spruce Ridge project reported, “Black Swan has invested over C$1 billion ($800 million) in our northeast BC Montney asset” as a private firm with big sponsors including the federal government’s Canada Pension Plan Investment Board.

 “Our results have been positive, demonstrating repeatable deliverability and leading North American economics; if sufficient infrastructure were in place to handle more volumes we could, and would, accelerate our drilling program,” said Black Swan.

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