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NEB OKs Spectra (Westcoast) Tolls; Major Expansion Planned to Serve Pacific LNG

Stability will prevail in natural gas transportation across British Columbia (BC) for two years while the main service provider embarks on the biggest growth project in its 57-year history.

Spectra Energy (Westcoast) received approval from the National Energy Board (NEB) for the stable base of its agenda: a 2014-2015 tolls and tariff settlement with customers of its current capacity of 3 Bcf/d.

The deal enables the BC grid to focus on a plan aimed at almost quadrupling its capacity by becoming the principal conduit between northern shale deposits and proposed liquefied natural gas (LNG) export terminals on the Pacific Coast.

The settlement was not opposed or even questioned by marketers or current shippers in the Canadian Association of Petroleum Producers. The co-operation resulted in approval within six weeks of filing the deal with the NEB .

Accepted BC pipeline grid revenue requirements are set at C$360 million (US$324 million) for this year and C$380 million (US$342 million) for 2015, along with a return on equity of 10%.

The result of the minimal change in revenues and profits is a forecast of stability for benchmark tolls such as C$0.1413 (US$0.1272) per Mcf this year and C$0.1487 (US$0.1338) in 2015 for firm northern long-distance service.

The settlement approval arrived two weeks after Spectra (Westcoast) presented its growth agenda to the BC Environmental Assessment Office. Titled the Westcoast Connector Gas Transmission Project, the program seeks a new pipeline corridor spanning most of Texas-sized BC from northeastern shale gas fields to proposed LNG export terminals on the Pacific Coast at Prince Rupert.

The plan calls for eventually filling the route with two jumbo pipelines, each one 850 kilometers (527 miles) long and capable of carrying 4.2 Bcf/d.

The initial anchor customer for transportation service on Westcoast Connector, BG Group's Prince Rupert LNG project, holds an NEB license to export a total 29.6 Tcf of gas at a daily rate of 2.9 Bcf/d.

But BG is only one of numerous potential customers. About half the lineup of 10 LNG export projects on BC's Pacific Coast intend to use Prince Rupert sites, as opposed to the main alternative port farther south at Kitimat.

The Spectra (Westcoast) application to BC authorities focuses on environmental issues, rather than economic matters and costs, posed by a new pipeline route across northern woods, muskeg swamps, and mountainous terrain.

The multi-volume assessment document remains in a confidential, preliminary screening stage before the BC environmental regulator.

Rival TransCanada Corp. is preparing applications for similar jumbo additions to the BC pipeline network, also backed by an initial customer from the Pacific Coast LNG project lineup.

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