Canada's National Energy Board (NEB) has approved the Brunswick Pipeline, a 145-kilometer (90-mile) pipeline intended to deliver gas from the planned Canaport liquefied natural gas (LNG) import terminal near Saint John, NB, to markets in Canada and the U.S. Northeast.
Emera Brunswick Pipeline Co. Ltd. (EBPC), the backer of the Brunswick Pipeline project, received environmental approval from the NEB in April (see Daily GPI, April 16). The NEB also approved tolls for the pipeline and EBPC's request to be designated as a Group 2 company. As conditions of the approval, EBPC will be required to develop and implement:
The Canaport terminal is sponsored by Repsol YPF and Irving Oil. Repsol is the only shipper on the Brunswick Pipeline, according to the document outlining the NEB's reasons for approving the project. According to the NEB, Repsol and Brunswick Pipeline reached a negotiated toll agreement dated May 15, 2006 that obligates Repsol to pay a monthly fixed toll for transportation of 791,292 gigajoule/d (close to 800 MMcf/d) on the Brunswick Pipeline over a 25-year period. The volume is the maximum daily transportation quantity (MDTQ) specified in an agreement between EBPC and Repsol.
"The monthly fixed toll would cover all fixed charges applicable to the Brunswick Pipeline, including an equity return, typically in the 11 to 14 percent range," the NEB document says.
Although Repsol has committed to the majority of capacity on Brunswick Pipeline, EBPC said there are three options for third parties seeking service on the pipe. A third party could negotiate with EBPC for capacity not required by Repsol (capacity exceeding the MDTQ); could negotiate with Repsol for assignment of its unused capacity; or it could negotiate with EBPC for expansion of the pipeline.
In responding to concerns raised by Enbridge Gas New Brunswick (EGNB) related to accessing the Brunswick Pipeline, EBPC said it is willing to allow EGNB to design, permit, construct, own, operate and maintain any interconnecting custody transfer station(s) that connect to the Brunswick Pipeline. Additionally, EBPC said it would not require EGNB to provide proof of gas supply when interconnecting with Brunswick.
"In the Board's view, the Brunswick Pipeline is an open access pipeline," the NEB said. "The Board is satisfied with the commitment of EBPC to enter into negotiations with EGNB to reach a mutually-acceptable agreement on pipeline access matters.
The Board is of the view that two or more shippers could use the Brunswick Pipeline under different circumstances; for example, they could have different transportation distances, different contract terms, or different types of services. As such, the Board recognizes that different shippers could face different tolls on the Brunswick Pipeline. However, tolls to be paid by third parties would have to be approved by the NEB.
Anadarko challenged the application on the grounds that the Brunswick Pipeline would be operationally dependent upon the Maritimes & Northeast Pipeline (M&NP). "Anadarko submitted that despite the fact that the Brunswick Pipeline would be both physically and operationally dependent upon the integrated M&NP system, it proposes to pay nothing for it or towards it.
"Anadarko stated that, since the Brunswick Pipeline does not pay its fair share of the costs associated with the utilization on the M&NP Mainline, Anadarko's LNG supply acquisition efforts [for its currently mothballed Bear Head LNG terminal] were hampered by having to try to overcome the competing Canaport Project's transportation advantage gained by the Brunswick Pipeline."
The NEB found, however, that Brunswick would be a standalone pipeline because it would be owned by a different corporate entity than the M&NP system; that its facilities are physically separate from the existing M&NP facilities; and that it would provide a unique and separate service from any other service provided by the M&NP system "and therefore is functionally distinguishable from M&NP."
Last year, Emera Inc. said it would invest approximately C$350 million for full ownership of Brunswick, which will travel through southwest New Brunswick and connect with the U.S. portion of M&NP at the international border near Baileyville, ME. Emera has been an investor in M&NP since its inception in 1999. Brunswick Pipeline will have a diameter of 30 inches and will be capable of carrying approximately 850 MMcf/d of regasified LNG. Capacity can be expanded with added compression. Construction is planned to begin this year and be completed by late 2008.
Canaport is poised to be the first new LNG receiving terminal on the East Coast of North America in decades. In February, the Federal Energy Regulatory Commission issued a favorable environmental review of M&NP's Phase IV compression and pipeline expansion in Maine that would support the Canaport terminal (see Daily GPI, Feb. 16).
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