TransCanada Corp. on Wednesday announced the second increase in traffic achieved on its cross-country natural gas Mainline by toll discount negotiations since 2016.
For C93 cents/GJ (US78 cents/MMBtu), shippers signed 10- to 21-year contracts for transportation service from Alberta to Ontario, the pipeline reported.
New deliveries are scheduled to add up in stages to a total of 630 MMcf/d, with start dates of Nov. 1 in 2019, 2020 and 2021.
Destinations for the increased gas flows include Ontario, Quebec, the United States, and Canadian east coast markets reached via a roundabout route on U.S. pipelines.
The traffic growth will trigger about C$250 million (US$200 million) in pipeline compressor increases, estimated TransCanada. Details of the delivery bargain will be disclosed by a regulatory application planned by the end of this year.
Eastbound flows of Alberta and British Columbia (BC) began accelerating Nov. 1, 2017, at a deeper discount negotiated for a more restricted service. On a 10-year package of contracts for 1.4 Bcf/d, the TransCanada toll dropped by 46% to C$0.77/GJ (US$0.65/MMBtu) from C$1.42/GJ (US$1.19/MMBtu).
Pressure continues for further rate reductions. A verdict is due soon from the National Energy Board (NEB) on gas shipper demands for across-the-board cuts of 17-36 per cent for deliveries to various Mainline destinations.
During a lengthy toll review case, through the Canadian Association of Petroleum Producers (CAPP), shippers sought the cuts as rebates of C$1.14 billion (US$910 million) in rate over-collections since 2014.
The cash sits in a self-insurance device created by a 2013 toll settlement between TransCanada and Mainline shippers: the Long Term Adjustment Account or LTAA for short. Settlement forecasts underestimated pipeline revenues, said CAPP.
Supply gluts and poor prices in Alberta and BC inflame demands for gas pipeline toll cuts. NEB records show a 31% drop in year-to-date averages to C$1.42/GJ (US$1.19/MMBtu) in 2018 from C$2.06/GJ (US$1.73/MMBtu) in 2017.