An estimated 38 Tcf of shale gas reserves in northern British Columbia (BC) will be connected to markets under a pipeline approval handed down Friday by Canada’s National Energy Board (NEB).
The ruling enables TransCanada Corp.’s supply gathering network in BC and Alberta — Nova Gas Transmission Ltd. (NGTL) — to hook up a 414-square-kilometer (160-square-mile) zone of the prolific Montney formation with an addition called the Towerbirch line (see Daily GPI, Sept. 11, 2015).
NGTL has long-term bookings to collect production of 859 MMcf/d on Towerbirch, an 87-kilometer (52-mile) stretch of 30- and 36-inch diameter pipeline near the Alaska Highway in the Dawson Creek and Fort St. John areas.
A two-member majority of the NEB project review panel authorized payment of the C$439 million (US$334 million) construction bill for Towerbirch with rolled-in tolls, which spread costs of additions across all users of the system.
But one of 37 conditions attached to the approval directs NGTL to report a change in use and possibly charge separate, increased tolls if Towerbirch is converted to a dedicated feeder line for one of the 20 proposed BC liquefied natural gas (LNG) export terminals.
The condition grew out of a case made by Westcoast Transmission (Spectra) and accepted by the panel’s dissenting member that the Alberta-born, rolled-in tolling regime potentially gives NGTL an unfair advantage in competition for pipeline growth in BC.
But the Canadian Association of Petroleum Producers (CAPP) backed the panel majority by testifying that Towerbirch and Montney shale supplies are needed to replace depleting reserves elsewhere in the 24,544-kilometer (15,251-mile) NGTL pipeline web.
Current gas output in the Western Canadian Sedimentary Basin declines at an average annual rate of 18%. Replacing the natural depletion requires development of 2 Bcf/d of new production every year, NEB was told.
NGTL data, compiled primarily from gas transportation customers, shows that production will quadruple to 1.2 Bcf/d from the Montney zone, known as Tower Lake, which will be served by Towerbirch.
The pipeline web’s producer data also shows that growing experience with horizontal drilling and hydraulic fracturing is making the mammoth BC shale gas deposit increasingly competitive. Supply costs currently stand at C$1.50-3.00/Mcf (US$1.15-2.28/Mcf), NGTL told NEB.
The Towerbirch schedule calls for swift completion of the line by Nov. 1, 2017. NGTL still has to await ratification of the NEB approval by the federal cabinet.
Under new political procedures enacted by the year-old Liberal government in Ottawa, effects of pipeline projects on native communities and greenhouse gas emissions will be double-checked before the final signature. Much of the NEB’s 184-page ruling, including its 37 approval conditions, focuses on resolving environmental and aboriginal relations issues.
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