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Alliance Readying 25% Natural Gas Capacity Increase to Chicago

After a year of testing Canadian demand for natural gas export service, Alliance Pipeline Ltd. has presented a C$2 billion ($1.6 billion) proposal for a 25% capacity increase.

The plan calls for raising deliveries to 2 Bcf/d from 1.6 Bcf/d by compressor additions to the 3,848-kilometer (2,291-mile) bullet line to Chicago from northern British Columbia (BC) and Alberta.

A two-month open-season of binding delivery contracts, closing May 30, is expected to put finishing touches on the package.

While Canadian exports dominate Alliance traffic, the offer includes added service on an U.S. inlet for North Dakota production.

"Strong customer demand is the driver for this initiative,” said Alliance Vice President Dan Sutherland. “Existing firm capacity on our system is fully subscribed, and interruptible capacity is at a premium."

Unlike older rival TransCanada Corp.’s half-empty Mainline, Alliance has stayed full since its completion in 2000 by offering a special service: extra high-pressure delivery of rich gas including premium-priced liquid byproducts in vapor form.

Alliance traverses the liquids-rich Montney and Duvernay formations in BC and Alberta. Unlike dry gas, Canadian byproduct exports stand out as a growth item. The National Energy Board (NEB) reported that sales revenues for propane and butane alone doubled to C$2.4 billion last year from C$1.2 billion in 2016.

Alliance predicted its expansion could be in service as of 4Q2021. The project emerged from a canvass of industry demand since March 2017, as a request for nonbinding expressions of interest. The binding service contract offer calls for 15-year commitments.

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