A potential market for growing gas supplies from the Marcellus Shale — Eastern Canada — could be in jeopardy as resistance to U.S. sourced gas grows among Canadian producers while Canadian landowners object to pipeline plans and a pipeline flow reversal project stumbles with regulators.
Following a flurry of citizen protest, the National Energy Board (NEB) has ruled that a hotly contested project by TransCanada Corp. to reverse flows on its Niagara Falls pipeline border crossing is deficient and cannot yet be considered for regulatory approval (see Shale Daily, Sept. 12).
TransCanada is seeking the pipe reversal as net annual U.S. natural gas imports from Canada at Niagara, NY, continue to plummet. According to Energy Information Administration data, net Niagara imports have plummeted 52% from 390.3 Bcf in 2005 to 188.5 Bcf in 2009. Of note, there were no exports from Niagara, NY, to Canada during this time frame.
The C$130 million (U.S. dollar at par) scheme ran into noisy community and environmental resistance akin to what has cropped up against TransCanada’s Keystone XL oilsands pipeline in the United States. The big difference between the cases is that the gas project is being challenged by industry as well as community groups. The Canadian Association of Petroleum Producers (CAPP) fired off a protest to the NEB as soon as TransCanada filed its Niagara Falls application in July, calling the flow reversal a “historic change” proposed with a “total lack” of explanation or justification.
For purposes of initiating a regulatory review, the NEB said the missing link in the gas pipeline blueprint is a route that will enable the board to assess potential effects on landowner rights. Engineering and safety questions were also raised, such as assurances about reliable operations of high-pressure equipment. TransCanada is asking the NEB to follow a special exemption procedure that is intended to prevent unnecessary regulatory ordeals by designating pipeline projects as routine, minor changes ready for approval without detailed route hearings.
According to landowners in affluent suburban and agricultural districts that the project affects in the Niagara Falls region, there are devils in the details that must be eliminated before TransCanada can proceed. Issues range from safety to effects of pipelines on property values.
While the Keystone dispute revolves around theoretical what-if questions about effects of potential oil spills, a real brush with disaster in Ontario gas transportation has come back to haunt TransCanada.
A public notice about the project said TransCanada has established a record of running its gas pipeline safely and reliably for more than 50 years. But a community association of Niagara Falls residents with long memories claimed that the southern line sprang a leak in 1978, and they dredged up news coverage of a much fresher example of a rupture and explosion last February.
The latest blast happened more than a kilometer (0.6 miles) away from any houses and no one was injured. But eyewitness accounts burned a lasting impression into Ontario residents that gas pipeline accidents have potential to do serious harm.
“It was a big huge rumbling noise,” said a description by a local woman. “It was huge flames in the air. The whole town [of Beardmore, which was amalgamated in 2001 into a bigger center called Greenstone] was pretty well awake. I could see the ambulance driving around, the fire trucks…”
While the escaping gas burned itself out, parts of the community were evacuated and a stretch of the TransCanada Highway was closed. Airline pilots reported seeing an orange ball of fire.
The accident site was 170 kilometers (102 miles) northeast of Thunder Bay, far to the northwest of Niagara Falls in thinly populated Ontario woods beyond Lake Superior. But the Niagara Falls landowners pointed out that both stretches of pipeline are part of the same half century-old system.
Rather than debate history or differences between northern and southern Ontario with Niagara Falls property owners, after a stormy community open house TransCanada reworded its public notices to drop any implied claims to completely accident-free operations.
Discussions continue on alternative routes for short stretches of new jumbo pipe, 42 inches in diameter, which are required for the Niagara Falls flow reversal project.
TransCanada has told the NEB it hopes to settle landowner concerns this month or in early November. In addition to affecting suburban and farm areas, the project includes laying 16.4 kilometers (10 miles) of the large-diameter pipe in the southwestern Ontario small cities of Brampton and Vaughan. The board said TransCanada is free to re-apply for the project when the design is complete.
The plan calls for the Niagara Falls border crossing to be reversed for northbound flows of an initial 446 MMcf/d into the Toronto region from the United States.
Although disclosures by TransCanada remain sketchy, project supporters Union Gas Ltd., Statoil Natural Gas LLC and the Ontario Ministry of Energy explained some of the plans in NEB filings. The documents link the TransCanada scheme to a U.S. plan by National Fuel Gas Supply Corp. called the Northern Access Project.
The National Fuel proposal is designed to relay Marcellus Shale gas production taken off the Tennessee system in Pennsylvania across New York State to Niagara Falls.
In another NEB case, on a tolls and business restructuring program, TransCanada has forecast that Marcellus production will grow more than eight-fold by 2020 to 8 Bcf/d from Pennsylvania, West Virginia, New York State, Ohio and Maryland. After 55 years as a Canadian export route, the Niagara Falls border crossing will be entirely reversed for northbound U.S. gas supplies, the forecast says.
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