NGI The Weekly Gas Market Report / NGI All News Access

Nova Scotia Picks Sempra to Distribute Gas

November 22, 1999
/ Print
| Share More
/ Text Size+

Nova Scotia Picks Sempra to Distribute Gas

Taking a giant step toward successfully completing a 10-month quest, Sempra Energy announced last week that the Nova Scotia Utility and Review Board (URB) has said it will recommend Sempra Atlantic Gas as the province's first-ever gas distributor. The provincial government, which has the final say in the matter, said it would issue a decision in the next three weeks.

"We are extremely pleased that the [URB] has recommended to the provincial government that Sempra Atlantic Gas be Nova Scotia's natural gas distributor. We are studying the decision to better understand its terms and conditions and to determine if it is consistent with our application," said Andrew Rea, president of Sempra Atlantic.

The Sempra subsidiary won the recommendation to serve the entire province over Maritimes NRG and several municipalities, which sought to serve individual territories within the province. When the opportunity became available last December, two other companies (Sask Energy and Scotia Advantage) also submitted bids, but subsequently dropped out after the provincial government said it would let industrial customers apply for direct connections to the Maritimes & Northeast Pipeline (M&NP), which is scheduled to begin operations in early December.

Nova Scotia's population is about 900,000. While the provincial government asked for proposals designed to deliver gas to 62% of the population within seven years of construction, Sempra's bid outlined a plan designed to service 75% of the population within that same time frame. Its system, scheduled to begin construction early next summer if approved, would consist of about 4,145 miles of medium-pressure plastic main, about 870 miles of high-pressure steel main, 11 tap stations and 150 pressure-limiting stations. The overall cost is estimated at C$1.1 billion. It has been estimated that the system could eventually transport 500 MMcf/d.

The URB said it chose Sempra over Maritimes NRG because the successful bid answered, either more completely or more accurately, issues of construction, market analysis, customer costs and financial capabilities of the company. First among the issues was Sempra's assurance of a four-year system build-out. Maritimes' bid indicated it would expand its system only if it was "economically feasible" to do so. Sempra, however, "provided an unequivocal commitment" to build-out its planned system for at least four full years.

Another key issue in the URB's decision was that Maritimes' proposal relied heavily on the M&NP lateral policy for purposes of constructing transmission facilities. Maritimes NRG argued that the facility construction costs would be rolled in to the M&NP toll, saving Nova Scotia gas users $200 million. Although the URB debated heavily on this issue, it said insufficient evidence was presented and it was not persuaded that the lateral policy can be relied on to ensure the timely construction of transmission facilities.

If Sempra's plan were accepted, it would represent the third new market supply system the California-based holding company is involved in. Frontier Energy, another Sempra subsidiary, recently began construction on its $55 million, 120-mile distribution system in Warren County, NC. The new pipe will bring gas service to seven northwestern North Carolina counties. Also, Sempra Energy Utility Ventures has teamed up with Bangor Gas to build a distribution system in Bangor, ME. Last year, 11 miles of plastic distribution line were installed in Brewer, Bangor and Veazie counties.

John Norris

©Copyright 1999 Intelligence Press, Inc. All rights reserved. The preceding news report may not be republished or redistributed in whole or in part without prior written consent of Intelligence Press, Inc.

ISSN © 2577-9877 | ISSN © 1532-1266
Comments powered by Disqus