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

Southern Crossing, a $350 million pipeline, would haveparalleled the existing BC Gas mainline in southern BritishColumbia between Yahk and Oliver. “The commission in its decisionfelt that the projected growth in demand from residential andcommercial customers alone on the BC Gas system were not sufficientto justify the large capital expenditure at this time,” BC Gas saidin a statement.

The commission did agree with BC Gas’ assessment that a majornew supply resource addition is required within the next five yearsto serve the growth in peak and seasonal demand, particularly inthe Lower Mainland. However, “.the commission is concerned aboutmaking a large capital investment for core market customers toserve a peaking and seasonal load when there are less costly andlower risk alternatives to meet the need. BC Gas claims that therewould be third-party revenues from transportation customers toincrease the utilization of the pipeline and offset a portion ofthe costs of the project. However, BC Gas did not support theseclaims with any firm commitments or a market test.”

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

John Davis, manager of business development for Williams GasPipelines West, which includes Northwest Pipeline, said it isunclear whether BC Gas will choose to contract for space onNorthwest’s Columbia River Gorge project, a competitor to SouthernCrossing. Capacity of Northwest’s Columbia River Gorge expansionresulting from a second open season could amount to an additional250,000 Dth/d from the Stanfield interconnect with PGT through theColumbia River Gorge to delivery points on Northwest betweenStanfield and Sumas. Northwest’s expansion would be in concert withexpansion of Pacific Gas Transmission’s (PGT) Pacific NorthwestSystem. Those seeking new capacity on Northwest would need capacityon PGT. “We really don’t know at this point in time,” Davis said ofwhether BC Gas will subscribe to the project. The second openseason for Columbia River Gorge began Oct. 1 and is currentlyunderway. It was set to end Jan. 31 or 30 days after the BCUCdecision on Southern Crossing, which would put the end date now atMay 7. A BC Gas spokesman said the company was busy examining itsoptions with BC Hydro.

TransCanada subsidiary ANG Pipeline also has announced plans fora new pipeline to cross southern British Columbia to allow Albertaproducers access to growing markets in the province’s interior orthe Lower Mainland and the U.S. Pacific Northwest. ANG’s KootenayPacific Pipeline would be a 348-mile, 20-inch high-pressure linewith capacity of 550 MMcf/d from the ANG system near Yahk to theLower Mainland at Huntingdon/Sumas.

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

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

In its analysis of alternatives, the BCUC said it found three tobe superior, the LNG options (considered as one), Northwest’sExpansion, and Southern Crossing. “All the LNG alternatives showvery similar results and, based on the information provided by thehearing participants, no individual LNG proposal emerges as thepreferred LNG option at this time.” The scenario of the SouthernCrossing project coupled with a BC Gas LNG project was notconsidered part of the LNG group as it ranks $40 to $60 millionlower in net present value savings than LNG projects alone, theBCUC said. BC Gas did not include ANG’s Kootenay project in itsresource optimization model submitted to the commission, but thecommission said, “.it is unlikely to have greater benefits for BCGas customers than the [Southern Crossing Project], withoutsubstantial support from other shippers.”

Joe Fisher, Houston

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