Shipper demand for 1.2 Bcf/d of new natural gas delivery capacity has prompted TransCanada Corp. to scale up its proposed Eastern Mainline Expansion into a jumbo service addition.
A formal project description, filed Thursday with the National Energy Board (NEB), calls for laying 370 kilometers (230 miles) of new pipe 36 inches in diameter across eastern Ontario by Nov. 1, 2016.
While the description focuses on hardware and construction plans, separate disclosures sketch the economic dimension.
Cost estimates are in preparation. Comparable projects elsewhere in Canada have run near C$1 billion (US$900 million) or more.
But the high level of demand for new service as of 2016 is known. The requirements showed up in a new capacity open season held to sound out shippers on their future requirements during the 2013-14 heating season, TransCanada reports in a new filing with the NEB, in support of a parallel eastern service and toll application.
A statement announcing the hardware description -- which kicks off lengthy reviews of its environmental and community aspects -- emphasizes that Canadian gas users are the driving forces behind the expansion.
TransCanada president Russ Girling said, "This new pipeline infrastructure will be a vital addition to the Canadian Mainline system to meet the needs of Ontario and Quebec gas consumers."
Girling added, "We are committed to ensuring that gas transmission capacity is available to meet the needs of customers and that the cost of serving those customers does not increase as a result of the transfer of a portion of the Canadian Mainline to Energy East."
He was referring to partial conversion to oil service of Canada’s 55-year-old national gas route from Alberta to Ontario and Quebec. Energy East is also in the project description stage before the NEB.
The statement affirmed that the Eastern Mainline Expansion also grows out of a historic realignment of North American gas trading patterns. Ontario and Quebec increasingly use low-cost shale gas imports from the Marcellus formation in the United States, which only travel about 10% as far as Alberta supplies. American exports into eastern Canada currently average 2.5 Bcf/d, or about 75% of demand in the region, after doubling since 2007.
The pipeline's announcement promised, "The Eastern Mainline project will ensure TransCanada can accommodate growing demand and new supplies of natural gas from the U.S. Northeast."
The disclosures of market developments were made in support of TransCanada’s parallel application for NEB approval of an agreement on coordinated pipeline service additions with the nation's three biggest distribution companies: Union Gas (Spectra) and Enbridge Gas in Ontario, and Gaz Metro in Quebec.
Detailed results of the open-season expansion capacity auction, such as identities of the bidders and the service volumes they want, remain confidential. But TransCanada reports that "in summary" 14 local distribution companies, marketers and industrial gas users made 27 requests for delivery capacity of 1,274 terajoules per day (1.2 Bcf/d).
TransCanada also confirmed there is "the possibility of flow reversal at Iroquois," a 20-year-old exit point in southeastern Ontario for Canadian gas exports via a pipeline named after the spot to destinations across New York State, New Jersey and New England.
The disclosures to the NEB report, "TransCanada has been in discussions with Marcellus producers and gas consumers about the possibility of receiving gas at Iroquois. Moreover, bids were received for service with an Iroquois receipt point in the 2016 new capacity open season [held during the 2013-14 heating season]."