The 1.4 Bcf/d Viking Voyageur pipeline expansion project is indanger of never making it past the planning stages. Its problemsobtaining market commitments have been well documented at FERC. Butwith the competing Alliance Pipeline project racing toward finalapproval following the major accord signed two weeks ago byCanadian gas industry stakeholders, it appears more likely Voyageurwill be squeezed out of the picture (NGI, 4/13/98, p.1).

Voyageur sponsors TransCanada PipeLines and Northern StatesPower were in meetings last week to discuss where to go from herewith the 800-mile pipeline expansion/extension. “I think we’retaking a look at the accord that happened.in Canada. But we had setout a goal with the producers to have our 1.4 Bcf signed up before[April 14] and we didn’t get there as far as volume commitments,”said Greg Palmer, president of Viking Gas Transmission andspokesman for Voyageur. “I’m not sure I can tell you at this pointwhat we’re going to do about it. One possibility is going ahead.Another possibility is [shelving the project].

“I think we had 929 MMcf/d [out of 1.4 Bcf/d]. And there areconditions in some of the agreements we have. Some of them are[conditioned on National Energy Board] approval by April 30, theavailability of upstream transport. The upstream part hasn’t evenbeen filed. Some of it was contingent on closure of the Wisconsincontracts – approval of the Public Service Commission of Wisconsin- and that’s happened. But really the biggest issue, the one thatis the cause of most of the [uncertainty] is that we had set a goalon shipper agreements.and we didn’t get there.”

Voyageur was designed as an alternative to the 1.3 Bcf/dAlliance project. But Voyageur targeted some different markets inthe Midwest by following a different route that paralleled theexisting Viking Gas Transmission system from Emerson, MB, throughMinnesota and Wisconsin and extending Viking to the Chicago hub.Its link to those markets was viewed as a strength, but troublefarther upstream may be a real weakness, according to someobservers.

There is a question about available supply. With Allianceremaining partly a producer-backed project, it’s the one likely tocapture most of what’s available, and with rapid decline rates onCanadian wells some observers think there won’t be enough left overfor Voyageur. Like other recent TransCanada pipeline expansions,particularly its huge Nexus project, Voyageur may have to bedownsized or canceled.

Sponsors already had filed a request with FERC to place theproject at risk for the first 10 years of operation because ofinadequate capacity subscriptions. “My understanding was that thatwas done in order to keep the regulatory process in motion but eventhe owners weren’t willing to risk a third of the project beingempty. So even though FERC may not require it, once the project wasbuilt I think the owners would require substantially the samething,” said Mark T. Maranger, CEO of Wisconsin Fuel and Light andleader of a coalition of Wisconsin gas distributors supporting theVoyageur project.

Maranger said he would be greatly disappointed if Voyageur wasnot built because it’s his only hope to get out from under themonopoly control of ANR Pipeline. He said even if Alliance isbuilt, bringing 1.3 Bcf/d to Chicago and dropping Chicago gasprices sharply, Wisconsin distributors will not benefit becausethey will still have to go through ANR. And ANR will not allow themto get out of their Gulf Coast contracts, fearing it could end uplike NGPL with huge capacity turnback problems.

Nevertheless, Maranger fears that even if Voyageur were builtthere wouldn’t be enough Canadian supply to fill the pipe. A Vikingofficial admitted potential shippers are having difficulty findingCanadian supply to flow on the line. Canadian producers may evenhave difficulty filling the 750 MMcf/d Northern Border expansionthis year, he said, let alone the on-going TransCanada expansions,Alliance, and Voyageur.

Rocco Canonica

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