The recent agreement between TransCanada PipeLines and theNorthwest Territories (NWT) (See NGI, Aug. 2) makes it plain thatboth parties have their sights set on bigger game than relativelymodest pipeline extensions into the southern part of theTerritories. After lying dormant for a decade, visions are revivingof a route extending all the way to the Mackenzie Delta and theBeaufort Sea to tap an estimated 13 Tcf of reserves found in a1970s drilling boom.

The trick is to find a way to make a northern pipeline pay. Theagreement specifies territorial and corporate leaders will “workdiligently together, as partners, to foster the economic and timelydevelopment of the natural gas reserve potential of the MackenzieRiver Delta region, including the natural gas transmissioninfrastructure to connect the region with TransCanada’s pipelinesystem.”

No target dates were set for results however. All sides agreed”the timing, route and tolling of a natural gas pipeline from theMackenzie Delta region will be dependent on market conditions,customer and community support and the pace of technologicaldevelopments.”

Right now the focus is on the currently booming Liard area justover the border from Alberta and British Columbia where Chevronsays it has found reserves so rich that just one well can deliversustained production of 80 to 100 MMcf/d. But producers wanted totie in the more remote areas for future development.

Meanwhile on the regulatory front, the ageement is not ascomplete as it appeared at first blush. The territorial government,rather than completely dropping its case to bring Alberta’s Novaintra-provincial pipeline under federal jurisdiction, has agreed totry for a “harmonized regulatory environment to eliminatejurisdictional uncertainty.” A target for making progress has beenset of March 31, 2000. Efforts to craft a regulatory system thattakes into account the desires of emerging production regions willcontinue, especially within an “intergovernmental committee onpipeline harmonization” that has been established by the federal,provincial and territorial Council of Energy Ministers.

TransCanada persuaded the territories to put the jurisdictionalappeal on hold with a pledge to cater to northern needs for gasservice at competitive toll rates. It remains to be seen how – ifat all, immediately – the settlement affects an application fordistance-based rates on Nova now before the Alberta Energy andUtilities Board. But TransCanada cured the worst bone of contentionby promising that future tolling settlements will take into accountnorthern interests that were not allowed representation in previoustoll negotiations.

The pact specifies “natural gas produced in the southern NWTshould be treated in accordance with a set of tolling principles noless favorable than the set of tolling principles applicable tonatural gas produced in northern Alberta.”

In trade for the concession on widening toll negotiations,TransCanada secured an open invitation to participate in new gasservice. The only pipeline link so far to mainline transportationhas been a spur line off the B.C. grid of Westcoast Energy, apartner in Alliance Pipeline. The new agreement does not rule outfurther expansions by Westcoast or Alliance, but it specifies theterritorial government and TransCanada will “work diligentlytogether, as partners . . . to encourage development of the naturalgas reserve potential of the southern NWT and to provide for theorderly and economic development of a competitively priced naturalgas transmission infrastructure in the southern NWT.”

Gordon Jaremko

©Copyright 1999 Intelligence Press, Inc. All rightsreserved. The preceding news report may not be republished orredistributed in whole or in part without prior written consent ofIntelligence Press, Inc.