NGI The Weekly Gas Market Report
After months of speculation in the industry, Alliance Pipelineconfirmed last week full commercial service will be delayed nearlya month until Oct. 30. When construction of the system wasscheduled nearly three years ago, Oct. 2 was the target date forcommercial service.
However, the delay doesn’t mean the market won’t be getting anyCanadian gas out of Alliance until the end of October. The pipelineopened one of its Chicago delivery valves last Thursday and startedselling 50-100 MMcf/d of gas into the market. It intends toincrease its sales each week eventually reaching its full 1.325Bcf/d load prior to switching to commercial service on Oct. 30,said spokesman Jack Crawford.
“We got Commission approval to actually sell our test gas. Rightnow I think we are dealing with three or four different marketers.Our initial deliveries right now are into the ANR system. That’sbecause its basically the only connection that is ready, but overthe next few weeks we expect they will all be ready to go and wewill test them all.
“I’d be surprised if it ends up being regular [volume increasesof 100 MMcf/d each week] but that’s kind of the game plan,” saidCrawford. “On Oct. 29 it will be Alliance selling [1.325 Bcf/d of]test gas, and on Oct. 30 it will be shippers nominating at one endand delivering at the other. The market may not see much of adifference. We obviously don’t want to start charging our shippersuntil we have the confidence that all the systems have been checkedout.”
The pipeline system is designed to deliver gas from producingregions of northeastern British Columbia and northwestern Albertato the Chicago area where the line interconnects with the NorthAmerican pipeline grid. Currently, more than 99% of the totalpipeline system has been installed, including 14 mainlinecompressor stations, 37 receipt points in British Columbia andAlberta, and seven delivery points in Illinois. Commissioningactivities commenced in March, including the flowing of gas intothe completed sections of line to purge air from the pipe. Atpresent, 95% of Alliance has been purged of air. This includes allthe mainline portion of the system (1,857 miles) from nearGordondale, AB, to the delivery section near Joliet, IL, and about306 miles out a total of 434 miles of laterals on the receiptportion of the system. To date, 6 Bcf of gas is in the commissionedmainline and lateral portions of the system, with the ultimate linepack targeted at 8 Bcf.
Crawford said there were a variety of factors that contributedto the delayed start-up. “The rain in Saskatchewan delayed us a bitback in July but we managed to catch up on the construction therein August. But it then meant that some of our commissioning didn’tget going until a little bit later. Farther west in Alberta and BCin fact we’ve had a couple of rain problems. In particular, we haveone relatively small but fairly long lateral that we haven’t evenbeen able to get on the right of way yet and that’s because ofrain.
“Up in BC we’ve been having trouble with a directional drill ofa creek on one of our laterals,” he said. “We’re likely to getapproval to open-cut that creek, but that will take us probably thebetter part of a month.
“On the downstream end, we had hoped to get more of ourdownstream connections right now. We are testing one but some ofthe others aren’t quite ready yet. We’re ready, but they are not.Then of course there is a fairly complex interaction between thepipeline and the [Aux Sable liquids] plant. We haven’t had a chanceto work on that yet. So when you look at all of those things, thequestion was when could we establish a date when all this stuffwould be done and we would be operational. We spent a fair amountof time with our shippers and they mentioned one other pipelinethat was being delayed one day at a time drove them to distraction.We agreed we would pick one of three dates, all Mondays: Oct. 2,Oct. 16 or Oct. 30, and we just had to pick one that we feltconfident in.”
Besides the timing of service, there has been another importantquestion on the minds of many market observers. Will the gasAlliance ships Oct. 30 be incremental gas or gas that would havebeen flowing through TransCanada.
“I don’t think it’s going to be purely either way,” saidCrawford. “Lots of guys are targeting for Nov. 1 to bring their newgas on to start the gas year so it all depends on how much showsup. It’s not a big secret that we’ve had some wet weather and someof the drilling and completion work hasn’t got done. That’s likelyto have some affect on it as well. That’s a delay though. How longare people going to pay $6 for gas? Boy people are going to have alot of money for drilling and projects.”
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