After a lengthy absence, resistance is redeveloping in Canada tolong-term commitments of significant Canadian gas supplies tomarkets in the United States.

The critics, while far short of a mass movement, are beginning acampaign at least to delay further expansion of the internationalgas trade. Conservation- and consumer-minded groups from Ontario,British Columbia, Saskatchewan and Alberta are calling on theNational Energy Board to hold full-scale public hearings into thefirst application for new long-term export licenses since thisyear’s escalation of prices and acceleration of development swunginto high gear. The intervenors hope to give the NEB no choice butto scrap plans to hold a speedy, non-controversial “paper hearing”— a document-exchange procedure that has worked in export licensecases since the mid-1990s – on applications involving ProGas Ltd.and RDO Foods Co.

The industry and the board alike are moving carefully, recallinghow a small but determined band of protesters held up major exportlicenses for about a year in the early 1990s with a successfulappeal to Canadian courts that claimed rapid procedures deniedintervenors rights to due process. By industry standards, the RDOdeal is routine. ProGas seeks a license to sell the NorthDakota-based food conglomerate 4.2 Bcf of gas over an eight-yearperiod for a potato processing plant in its home town of GrandForks. In another application also regarded as routine by currentstandards in the Canadian industry, ProGas seeks an eight-yearextension of a blanket export license to serve multiple U.S.markets until 2008 and about a five-fold increase in the totalvolumes authorized to head south to 109 Bcf. The blanket licensecovers a part of the ProGas sales portfolio that travels by theFoothills-Northern Border route to Chicago.

Among the protesters stand the Citizens Oil and Gas Council -formerly Rocky Mountain Ecosystem Coalition, architect of theearly-1990s court case – and a clutch of activists such as theVancouver chapter in the Council of Canadians, Citizens ConcernedAbout Free Trade, Albertans for a Wild Chinchaga, RAGE (RainforestAction 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 WildlifeFoundation (represented by a celebrated expert on bears, BrianHorejsi).

The protesters maintain that accelerating gas exports to theU.S. both drive proliferating industrial invasions of westernCanada’s last natural spaces along the foothills of the RockyMountains and make domestic gas consumers pay inflated prices.While drilling rigs are setting activity records in gas-proneregions of B.C., Alberta and Saskatchewan, Canadian distributioncompanies are in a series of cases before utility commissions,raising commodity rates to pass on prices that have increased intothe C$5/Mcf (US$3.45). The new domestic prices, which have held upfor much of this year, represent a five-fold increase compared tomid-1990s levels on glutted domestic markets that prevailed beforethe recent wave of international pipeline expansions.

Newly-released NEB figures confirm that Canadian exporters arehaving a banner year, barring any surprise successes by irritatedconsumers and environmentalists out to trip up the industry.

In the first half of the current gas-contract year, between lastNov. 1 and this April 30, the NEB data shows export volumes jumped10.3% to 1.76 Tcf. Average prices at the border gained 32% toUS$2.55 per MMBtu. The bottom line in first-half 1999-2000 was a45% leap in Canadian gas export revenues to US$4.5 billion.

The greatest volume growth was in the northeastern U.S., whereCanadian exporters increased sales by 23.8% to 484.5 Bcf in thefirst half of the 1999-00 contract year. The strongest improvementin prices was registered by exports to California, with the averagefetched 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 virtually100% in the years preceding deregulation and free trade. Shorterdeals involve much less elaborate procedures before the NEB becausethey are deemed not to represent large supply commitments. But bigaggregators such as ProGas, which represents a supply pool of 186producers and 2.6 Tcf of dedicated gas reserves, continue tomaintain long-term export licenses in order to enhance thestability of their arrangements and keep open options of makinglengthy sales contracts.

Gordon Jaremko, Calgary

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