Duke Energy Gas Transmission (DEGT) started a broad-based marketing blitz last week for potentially diverse or integrated expansions on its three major eastern gas transportation and storage businesses: Algonquin Gas Transmission, Texas Eastern Transmission, and Union Gas Limited. Company officials said the move has a lot to do with expectations for growing liquefied natural gas (LNG) imports and the impact they will have on gas flows on the eastern pipeline grid.

The company is simultaneously conducting open seasons through Sept. 30 to test market interest in expansions on all three pipeline and storage systems.

Duke’s Greg Rizzo, DEGT group vice president, said that several of the DEGT systems established all-time peak throughput days last winter despite 850 MMcf/d of new pipeline capacity that the company added to the grid last year. But Rizzo also said there is interest in capacity to support new sources of supply from existing and proposed LNG import terminals in the Northeast, Gulf Coast and in eastern Canada.

“I think it’s a combination of a demand pull and a supply push [that has prompted us to test the market for expansions],” said Rizzo. “As an example, this past winter on the Algonquin system, Algonquin experienced 11 of its top 12 peak days in its history. For Texas Eastern, it experienced three of its top four peak days in its history in its market area. The demand has grown some, and I think we’re ripe for some contracting to meet that for reliability needs.

“The other phenomenon that has taken place is the influence of more LNG coming into the system. An example of that is on the Algonquin system — which is interconnected with the Distrigas LNG facility in Everett, MA. Distrigas has a firm 90,000 Dth/d contract on Algonquin and we are expanding that for this winter to 150,000 Dth/d so they can be assured that they can get their gas into the Algonquin system.”

Rizzo noted that Algonquin also completed a new connection with Maritimes and Northeast Pipeline at Beverly, MA, last year, bringing eastern Canadian gas directly into the system for the first time. “You’re seeing the Algonquin pipeline become much more of a header system,” he said. “And it’s in a position that it can expand at very competitive rates.”

Rizzo also mentioned that Algonquin filed earlier this year with FERC to build a new lateral to the Providence, RI, LNG storage facility, which KeySpan is converting to an LNG import terminal. The proposed Weavers Cove LNG terminal in Fall River, MA, also plans to interconnect with Algonquin.

“I think you are going to see some of the LNG sponsors wanting the downstream capacity path on Algonquin so that they can be assured of making their deliveries.”

Phil Knoll, DEGT group vice president, said Union Gas also has received “at least one proposal for an LNG facility in eastern Canada to bring their gas back to Dawn storage and functionally tie it in there.” Irving Oil is planing an LNG terminal at its Canaport refinery in St. John, NB, and Access Northeast Energy is planning an LNG terminal in Point Tupper, NS.

Knoll, however, indicated that demand from power generators could be the main expansion driver on the Union system. “The customers have indicated a pretty good interest in this open season already,” he said, noting that the Ontario provincial government currently has a request for proposals out for 2,500 MW of additional power generation. “A good deal of this will be gas-fired, and that’s going to require some additional transmission and storage facilities.”

This is the first time that Duke has combined multiple business units in a coordinated approach to the market. “We are kind of trying to demonstrate the full capability of what DEGT can do in the Northeast and eastern Canada,” said Rizzo. “We are allowing the marketplace to pick how it would like to participate in this.”

For example, on the Texas Eastern System, the open season enables interested parties access to new supply sources and services to move gas from supply areas such as the Gulf Coast or the Chicago/Lebanon Lateral to the Mid Atlantic and Northeast regions.

“We are expanding Egan [storage in Acadia Parish, LA] — we announced that a couple months ago — from 16 Bcf to 24 Bcf,” said Rizzo. “If a customer wants to they can take a piece of Egan and have a transportation path [on Tetco] from Louisiana all the way to New York, or they could choose to take storage from somebody like a Texas Gas that can make a delivery to Texas Eastern at Lebanon, OH, or they could go through Dawn and maybe Algonquin makes delivery to them. We are really not trying to dictate to our customers where they have to source their gas.”

The open seasons run from Aug. 3 to Sept. 30. For more information, contact Tina Faraca at Algonquin at (617) 560-1462 or tvfaraca@duke-energy.com; Bob Riga at Texas Eastern at (617) 560-1436 or rgriga@duke-energy.com; or Carol Cameron at Union Gas at (519) 436-5258 or ccameron@uniongas.com.

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