BC Gas' Southern Crossing Denied;Others Vie to Fill Void

Although the British Columbia Utilities Commission (BCUC) refused approval of the BC Gas Southern Crossing Pipeline, multiple LNG projects, and pipeline expansions and extensions are waiting to fill the void, boosting gas supplies to the B.C. Lower Mainland and U.S. Pacific Northwest.

Southern Crossing, a $350 million pipeline, would have paralleled the existing BC Gas mainline in southern British Columbia between Yahk and Oliver. "The commission in its decision felt that the projected growth in demand from residential and commercial customers alone on the BC Gas system were not sufficient to justify the large capital expenditure at this time," BC Gas said in a statement.

The commission did agree with BC Gas' assessment that a major new supply resource addition is required within the next five years to serve the growth in peak and seasonal demand, particularly in the Lower Mainland. However, ".the commission is concerned about making a large capital investment for core market customers to serve a peaking and seasonal load when there are less costly and lower risk alternatives to meet the need. BC Gas claims that there would be third-party revenues from transportation customers to increase the utilization of the pipeline and offset a portion of the costs of the project. However, BC Gas did not support these claims with any firm commitments or a market test."

The commission ordered BC Gas to explore synergies between the seasonal and peaking needs of its customers and the firm pipeline capacity requirements represented by new thermal generation plants. BC Hydro is looking at firming up gas transportation for increased power load. Once BC Gas contracts capacity to BC Hydro, it could purchase some of the capacity back during peak demand periods for gas, explained Randy Jesperson, BC Gas senior vice president for gas supply. BC Gas is to file a progress report on negotiations with BC Hydro for an alternative project by July 3. A firm proposal on that project is due no later than Oct. 2.

John Davis, manager of business development for Williams Gas Pipelines West, which includes Northwest Pipeline, said it is unclear whether BC Gas will choose to contract for space on Northwest's Columbia River Gorge project, a competitor to Southern Crossing. Capacity of Northwest's Columbia River Gorge expansion resulting from a second open season could amount to an additional 250,000 Dth/d from the Stanfield interconnect with PGT through the Columbia River Gorge to delivery points on Northwest between Stanfield and Sumas. Northwest's expansion would be in concert with expansion of Pacific Gas Transmission's (PGT) Pacific Northwest System. Those seeking new capacity on Northwest would need capacity on PGT. "We really don't know at this point in time," Davis said of whether BC Gas will subscribe to the project. The second open season for Columbia River Gorge began Oct. 1 and is currently underway. It was set to end Jan. 31 or 30 days after the BCUC decision on Southern Crossing, which would put the end date now at May 7. A BC Gas spokesman said the company was busy examining its options with BC Hydro.

TransCanada subsidiary ANG Pipeline also has announced plans for a new pipeline to cross southern British Columbia to allow Alberta producers access to growing markets in the province's interior or the Lower Mainland and the U.S. Pacific Northwest. ANG's Kootenay Pacific Pipeline would be a 348-mile, 20-inch high-pressure line with capacity of 550 MMcf/d from the ANG system near Yahk to the Lower Mainland at Huntingdon/Sumas.

Another alternative to Southern Crossing has been suggested by Westcoast Energy. It would expand the Westcoast system between producing fields of northeastern British Columbia, production areas in northern Alberta, and downstream markets in British Columbia.

Four liquefied natural gas (LNG) storage projects also are contemplated to meet peak shaving demand in the region. Proposals are from BC Gas, Pacific Gas Transmission, Westcoast Gas Services, and Williams International Pipeline. Westcoast Energy said it is pleased with the BCUC decision on Southern Crossing and support of the LNG projects.

In its analysis of alternatives, the BCUC said it found three to be superior, the LNG options (considered as one), Northwest's Expansion, and Southern Crossing. "All the LNG alternatives show very similar results and, based on the information provided by the hearing participants, no individual LNG proposal emerges as the preferred LNG option at this time." The scenario of the Southern Crossing project coupled with a BC Gas LNG project was not considered part of the LNG group as it ranks $40 to $60 million lower in net present value savings than LNG projects alone, the BCUC said. BC Gas did not include ANG's Kootenay project in its resource optimization model submitted to the commission, but the commission said, ".it is unlikely to have greater benefits for BC Gas customers than the [Southern Crossing Project], without substantial support from other shippers."

Joe Fisher, Houston

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