NGI The Weekly Gas Market Report / NGI All News Access

Maritimes Receives Expansion Interest Mainly for LNG Supply

Maritimes & Northeast Pipeline (Maritimes) said a recent open season drew expressions of interest from potential shippers for about 1.5 Bcf/d of additional firm transportation capacity. The new capacity would be used to transport regasified liquefied natural gas (LNG) from proposed terminals in Canada and possibly additional offshore natural gas production to markets in Canada and the United States.

Maritimes hopes to sign binding contracts for some of that proposed capacity before June 1 and to file an application for an expansion later this year. The project would require new infrastructure in the U.S. and Canada along the 850-mile pipeline system. It is expected to be in service in 2007-2008.

"Our pipeline system connects directly to key market areas in Atlantic Canada and New England and increasing gas supply access to these markets will benefit consumers in these areas," said Maritimes President Doug Bloom. He said the existing pipeline system can be "efficiently expanded to serve new and existing customers" and the project would result in "lower rates allowing competitive deliveries of significant incremental supplies to growing markets."

The open season was conducted from Feb. 15 to March 31 to gauge market interest in new transportation service for LNG or other supply projects that could connect to the Maritimes system in Atlantic Canada and New England. Maritimes spokesman Stephen Rankin said most of the expressions of interest came from LNG project developers. He wouldn't say whether offshore producers were interested in additional capacity.

Maritimes canceled its Phase IV expansion project last year after EnCana decided that its 400 MMcf/d Deep Panuke gas discovery offshore Nova Scotia would not support a 20-year pipeline transportation agreement. However, analysts say EnCana is still in talks with the Sable Offshore Energy Project (SOEP) producers to possibly utilize some of their pipeline facilities offshore Nova Scotia near Sable Island.

There also may be some economic efficiencies on pipeline capacity from the numerous LNG terminals being planned in the region. About 4.5 Bcf/d of new LNG supply is planned at six proposed terminals, two of which have been approved by regulators:

A Maritimes spokesman said the majority of the interest in new pipeline capacity came from LNG suppliers. But the pipeline obviously is still interested in also transporting more offshore production. In addition to EnCana's Deep Panuke gas there also may be commercial development of Marathon's deepwater Annapolis project. Meanwhile, the SOEP partners may have additional development plans.

Whitwham said Maritimes could add 600-700 MMcf/d of pipeline capacity through compression alone. There currently is no compression on the Canadian portion of the system. The pipeline has long-term contracts for 555 MMcf/d of firm capacity in Canada and 360 MMcf/d in the United States. Another 40 MMcf/d is under short-term contract in the U.S. The Canadian line currently could transport about 600 MMcf/d, while the U.S. portion could carry about 450 MMcf/d.

However, Sable Island production offshore Nova Scotia has been disappointing in recent years. It had been greater than 555 MMcf/d when gas flows began in January 2000, but currently SOEP is producing about 410-415 MMcf/d. Shell cut its Sable reserves by about 670 Bcf last year.

There have been some positive signs lately as SOEP producers brought on a couple of new wells. An additional 125 MMcf/d of Sable production is expected to come from the South Venture field early this year, according to Lehman Brothers. There also may be some other things SOEP can do to optimize existing wells, Whitwham said.

With six proposed LNG terminals in the region, offshore producers could find lower rates for transportation capacity depending on the number of shippers that sign up for new space, the amount of capacity they put under contract and the delivery points selected.

Thanks to the Phase III expansion, the Boston area is now a major direct destination. Phase III went into service in December 2003, extending Maritimes about 25 miles to Algonquin's HubLine system in Beverly, MA. The extension provided about 230 MMcf/d of capacity but Maritimes' U.S. mainline remained at 400 MMcf/d.

Maritimes is owned by affiliates of Duke Energy (77.53%), Emera Inc. (12.92%) and Exxon Mobil Corp. (9.55%).

©Copyright 2005 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.

Copyright ©2018 Natural Gas Intelligence - All Rights Reserved.
ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus