U.S. suppliers will turn the tables on Canadian rivals in the North American natural gas market by fully reversing current cross-border flows in the Niagara Falls trading region of Ontario and New York State, TransCanada Corp. predicts.

By 2020 Marcellus Shale production from the northeastern United States will stream up into Canada at a rate of up to 400 MMcf/d, according to TransCanada's pipeline business, service and toll restructuring blueprint. U.S. shale gas is projected to arrive via Canada's Niagara and Chippawa delivery points northwest of Buffalo, NY, where the TransCanada Mainline interconnects with the National Fuel Gas, Empire and Tennessee Gas Pipeline systems.

In a throughput study generated to support the restructuring scheme, filed with the National Energy Board (NEB) on Sept. 2, TransCanada predicts that northeastern U.S. production will grow more than eight-fold within 10 years.

"The Marcellus production basin" in Pennsylvania, West Virginia, New York State, Ohio, New Jersey and Maryland "is expected to grow from approximately 1 Bcf/d in 2010 to over 8 Bcf/d by 2020," the forecasts say. "Within a few years Marcellus production growth is expected to result in reversed flows at the Niagara and Chippawa delivery points. Flows at these points are expected to reverse from exporting about 0.4 Bcf/d in 2010 to importing about 0.3-0.4 Bcf/d in 2020."

Similar projections support a TransCanada eastern facilities construction application submitted to the NEB in July, seeking C$130 million (U.S. dollar at par) in compressor and pipe installations for northbound flows of U.S. gas from Niagara into the Dawn trading and storage hub in southwestern Ontario.

The plan has been protested by the Canadian Association of Petroleum Producers (CAPP) as a Pearl Harbor-like "historic" assault on 55-year-old trading patterns. But the forthcoming switch is no sneak attack and has been evolving for more than a year, say its supporters on the buying side of the gas market, such as the Association of Power Producers of Ontario (APPrO) (see Daily GPI, Aug. 15).

In an association newsletter, the electricity generators point out that Canadian exports via Niagara have shrunk drastically. By 2009, as Alberta wells depleted and consumption rose at thermal oilsands extraction projects, pipeline deliveries into the United States fell to an estimated 500 MMcf/d from the Niagara area's capacity of 1.6 Bcf/d.

With encouragement from the Ontario Energy Board, central Canadian gas users are supporting numerous proposals for reconfigurations of the pipeline grid in order to gain ability to shop around internationally for supplies. "It's clear that the nature of natural gas supply arrangements in Ontario is in transition," APPrO says.

"Competition will be strong," the Ontario consumers happily predict. "The Dawn Hub will see some of this competition. Based on the various projects being proposed and the new services being offered between Niagara and Dawn, it is likely that at least 0.5 Bcf/d will be available at the Dawn hub."

That much has been conceded by TransCanada's restructuring forecasts and application for new eastern facilities this summer (see Daily GPI, Sept. 6). But the Ontario consumers suggest that the changes put on the regulatory table to date only mark the start of the turnabout in the natural gas trade.

"This (0.5Bcf/d) could potentially grow up to (a total) 2 Bcf/d with reversal of the Niagara pipeline and other new projects from Michigan into Dawn," APPrO predicts. "This shale gas may also require the development of new transportation and storage services to facilitate the integration of the supply into the overall natural gas market."