Traffic continues to grow on the northbound natural gas freeway from the United States into Ontario and Quebec, fueling plans to increase delivery capacity on the Canadian side of the border.
U.S. pipeline exports to Canada rose by 4.3% to 504.2 Bcf in the first six months of this year from 483.4 Bcf during the same period of 2012, according to the latest trade records kept by the U.S. Department of Energy.
The value of the trade accelerated 12 times faster than the volume, according to the latest quarterly summary by the department’s natural gas regulatory activities division.
U.S. gas fetched an average US$4.17/MMBtu at the Canadian border in first-half 2013, up 53.4% from US$2.72/MMBtu during the first six months of 2012.
Southbound Canadian exports, while still higher than northbound U.S. sales, prolonged their five-year retreat. Pipeline deliveries of Canadian gas into the U.S. dropped by 6.3% to 1.44 Tcf in the first six months of this year from 1.54 Tcf during the same period of 2012.
The volume loss was more than offset by price gains. Canadian gas fetched an average of US$3.82/MMBtu at the international border in first-half 2013, up by 57% from US$2.43/MMBtu during January-June 2012.
Unlike Canadian exports, which earn lower average border prices by going to destinations across the continent, U.S. northbound international sales are concentrated in the highest-value markets. About two-thirds of U.S. exports to Canada go to the country’s eastern storage and trading hub southwest of Toronto at Dawn via a border crossing beneath the St. Clair River on the northern boundary of Michigan. U.S. exports are also beginning to grow via Niagara Falls, where half-century-old pipeline connections across the border have been reversed to flow north.
Additional and lasting increases in the northbound U.S. gas traffic are built into a Sept. 13 settlement of service and tariff disputes between TransCanada Corp. and the three biggest, interconnected Canadian distribution companies: Union Gas (Spectra) in southwestern Ontario, Enbridge Gas in the Toronto-Ottawa region, and Quebec’s Gaz Metro (see Daily GPI, Sept. 16).
On top of ending complicated toll squabbles, the agreement commits TransCanada to increase capacity on the eastern end of its gas Mainline with a project called Kings’ North. Union and Gaz Metro will also add capacity in the Dawn region by pressing ahead with pipeline additions planned before the settlement.
The delivery capacity of Kings’ North, along with service and tariff aspects of the project, was left open to further negotiation by the deal and no volume targets were revealed. But letters to the National Energy Board (NEB), describing the settlement and requesting termination of hotly contested hearings into the Mainline disputes, predicted agreements on details in time to install Kings’ North during 2015. The new facilities will have built-in features to enable further capacity increases in 2016 and later years, the letters added. The NEB granted the request for cancellation of the eastern Mainline tariff hearings.
The forthcoming detailed agreements on Ontario and Quebec capacity additions potentially include facilities to compensate for service losses forecast to result from TransCanada’s Energy East proposal for partial conversion of its Mainline to oil service capable of carrying up to 1.1 million b/d (seeDaily GPI, Aug. 5).
The scheme is enthusiastically supported on the western, supply side of energy markets served by the Mainline from Alberta to Ontario, Quebec and connections across the U.S. border. Energy East only affects one of six pipes in the right-of-way of the Mainline, which has been running half-empty on its western segments and generating toll hikes to cover costs of keeping open excess capacity.
Pipeline shipments to Canada account for 57% of U.S. gas exports, according to the U.S. trade records.
Counting 333.6 Bcf of southbound sales into Mexico, total U.S. exports were 837.9 Bcf in first-half 2013, up 7% from 783.1 Bcf in the same period of 2012.
U.S. exports and re-exports of imported liquefied natural gas (LNG) fell to zero during the first six months of this year from 5.2 Bcf in the same period of 2012. U.S. imports of LNG in first-half 2013 were 52 Bcf, down 40.4% from 87.2 Bcf in the same period of 2012.
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