Opposition to Gas Exports Growing in Canada
After a lengthy absence, resistance is redeveloping in Canada to
long-term commitments of significant Canadian gas supplies to
markets in the United States.
The critics, while far short of a mass movement, are beginning a
campaign at least to delay further expansion of the international
gas trade. Conservation- and consumer-minded groups from Ontario,
British Columbia, Saskatchewan and Alberta are calling on the
National Energy Board to hold full-scale public hearings into the
first application for new long-term export licenses since this
year's escalation of prices and acceleration of development swung
into high gear. The intervenors hope to give the NEB no choice but
to scrap plans to hold a speedy, non-controversial "paper hearing"
--- a document-exchange procedure that has worked in export license
cases since the mid-1990s - on applications involving ProGas Ltd.
and RDO Foods Co.
The industry and the board alike are moving carefully, recalling
how a small but determined band of protesters held up major export
licenses for about a year in the early 1990s with a successful
appeal to Canadian courts that claimed rapid procedures denied
intervenors rights to due process. By industry standards, the RDO
deal is routine. ProGas seeks a license to sell the North
Dakota-based food conglomerate 4.2 Bcf of gas over an eight-year
period for a potato processing plant in its home town of Grand
Forks. In another application also regarded as routine by current
standards in the Canadian industry, ProGas seeks an eight-year
extension of a blanket export license to serve multiple U.S.
markets until 2008 and about a five-fold increase in the total
volumes authorized to head south to 109 Bcf. The blanket license
covers a part of the ProGas sales portfolio that travels by the
Foothills-Northern Border route to Chicago.
Among the protesters stand the Citizens Oil and Gas Council -
formerly Rocky Mountain Ecosystem Coalition, architect of the
early-1990s court case - and a clutch of activists such as the
Vancouver chapter in the Council of Canadians, Citizens Concerned
About Free Trade, Albertans for a Wild Chinchaga, RAGE (Rainforest
Action Group of Edmonton), the Castle-Crown Wilderness Coalition,
the Edmonton chapter in the Canadian Parks and Wilderness Society,
the Alberta Wilderness Association and the Speak Up For Wildlife
Foundation (represented by a celebrated expert on bears, Brian
The protesters maintain that accelerating gas exports to the
U.S. both drive proliferating industrial invasions of western
Canada's last natural spaces along the foothills of the Rocky
Mountains and make domestic gas consumers pay inflated prices.
While drilling rigs are setting activity records in gas-prone
regions of B.C., Alberta and Saskatchewan, Canadian distribution
companies are in a series of cases before utility commissions,
raising commodity rates to pass on prices that have increased into
the C$5/Mcf (US$3.45). The new domestic prices, which have held up
for much of this year, represent a five-fold increase compared to
mid-1990s levels on glutted domestic markets that prevailed before
the recent wave of international pipeline expansions.
Newly-released NEB figures confirm that Canadian exporters are
having a banner year, barring any surprise successes by irritated
consumers and environmentalists out to trip up the industry.
In the first half of the current gas-contract year, between last
Nov. 1 and this April 30, the NEB data shows export volumes jumped
10.3% to 1.76 Tcf. Average prices at the border gained 32% to
US$2.55 per MMBtu. The bottom line in first-half 1999-2000 was a
45% leap in Canadian gas export revenues to US$4.5 billion.
The greatest volume growth was in the northeastern U.S., where
Canadian exporters increased sales by 23.8% to 484.5 Bcf in the
first half of the 1999-00 contract year. The strongest improvement
in prices was registered by exports to California, with the average
fetched at the Canadian border climbing 36.3% to US$2.40 per MMBtu.
Long-term sales, under contracts lasting two years or more,
account for only 28% of Canadian export sales compared to virtually
100% in the years preceding deregulation and free trade. Shorter
deals involve much less elaborate procedures before the NEB because
they are deemed not to represent large supply commitments. But big
aggregators such as ProGas, which represents a supply pool of 186
producers and 2.6 Tcf of dedicated gas reserves, continue to
maintain long-term export licenses in order to enhance the
stability of their arrangements and keep open options of making
lengthy sales contracts.
Gordon Jaremko, Calgary