Northern natural gas and thermal oilsands production will be able to grow in step as a result of approval granted Thursday for a C$1.29 billion (US$993 million) set of pipeline additions in Alberta and British Columbia.
The National Energy Board (NEB) authorized TransCanada Corp. to increase capacity on its western supply collection and delivery grid, Nova Gas Transmission Ltd. (NGTL), by looping five stretches of pipe and increasing horsepower at two compressor stations.
The project enables gas producers both to maintain and expand output for bitumen plants by replacing aging conventional wells with new shale output, chiefly the accessible Montney but also the more remote Horn River, Cordova, Liard and Duvernay deposits (see Daily GPI, April 2, 2015).
To keep up with both new oilsands and gas production, NGTL told the NEB the new facilities need to be built and in service by late 2017. The initial driver of the program is a package of 25 contracts with seven producers for gas deliveries of 318 MMcf/d.
The facilities will draw gas from fields within the NGTL grid in northwestern Alberta and northeastern BC. Deliveries will flow east into the most active parts of the bitumen belt, a vast region of evergreen forest and muskeg swamps along the Alberta-Saskatchewan boundary that the industry and the NEB have dubbed the “oilsands delivery area.”
Nearly one million b/d of new oilsands production remain in development in projects that started before energy prices took a dive on North American and international markets in late 2014. New projects using improved methods also continue to seek approval by the Alberta Energy Regulator, although at a reduced rate.
Thermal bitumen plants use an average of 1 Mcf of gas per barrel of oil output, in extraction processes that rely on steam for heat and electricity. But the Alberta industry’s efficiency range is wide.
The fastest-growing oilsands branch — in-situ, or underground extraction, as opposed to open pit mining — is the biggest gas consumer, using up to 2 Mcf per barrel of output and sometimes even more depending on the age of operations and ore deposit structures.
During NEB hearings, NGTL forecast that supply available to its grid would increase to 19 Bcf/d by 2025 from the current 14.2 Bcf/d. Traffic is projected to stabilize, at least for an anticipated relatively slow period of oil sands growth, in a range of 14.4-15 Bcf/d.
NGTL also predicted that total western Canadian demand would rise by about 50% to 8.6 Bcf/d by 2025 from the current 5.8 Bcf/d, thanks to a combination of oil sands growth and rising use of gas for power plant fuel as coal-fired stations are phased out.
Hearings on the NGTL expansion highlighted the increasing public sensitivity of oil sands and pipeline issues. Additions packages of varying sizes are annual events on TransCanada’s grid, and for generations rarely caught attention outside immediately affected industry participants.
Even though nine-tenths of the installations only affect established rights-of-way and operating sites, the new package escalated into a complex approval case involving 16 aboriginal groups, 24 commercial intervenors, two federal government departments and a provincial agency. The NEB tacked 48 conditions onto the construction approval, with special attention given to protecting the habitat of caribou as an endangered species and to employing native monitors as watchdogs over industry conduct in traditional territories and sensitive environmental areas.
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