As Maritimes & Northeast Pipeline heads into construction,it is starting to look more like a domestic Canadian supply systemand lose its original flavor as almost exclusively an exportproject. The evolution of MNP as the delivery route for the SableOffshore Energy Project has set off speculation in Canada that itwill change significantly by its scheduled in-service date of Nov.1, 1999.
Ziff Energy Group, for instance, predicts the American segmentof the line will carry “no more than 275,000 MMBtu per day” – or62% of the original plan for 440,000 MMBtu/d – “and possibly less.”The change is being blamed partly on conditions in the UnitedStates, where analysts point to less buoyant gas demand thanexpected and an application by MNP to Washington’s Federal EnergyRegulatory Commission for a postponement of plans to “prebuild” thenorthern-most American facilities in Maine. But there is alsoplenty of action in Canada.
North of the international border, MNP is proceeding full steamahead, with C$11 million (US$8 million) in contracts just awardedfor a September start on receiving pipe, stockpiling it across NovaScotia and New Brunswick, and clearing the Canadian right-of-way. Introducing and spreading gas service in Atlantic Canada, the lastpart of the country without it, is a cornerstone of both MNP andSOEP. Officially, the projects remain primarily dedicated toexports, with about four-fifths of deliverability dedicated to thenortheastern U.S. But domestic, Atlantic Canadian markets arebeing courted aggressively -and they are stepping forward.
The National Energy Board promptly scheduled hearings to startNov. 23 on a third “lateral” proposed by MNP to serve buddingAtlantic Canadian markets. The new entry raises the pipelineproject’s commitments to domestic delivery facilities to C$186million ($US133 million), counting earlier applications forconstruction of spur lines to Halifax on the Atlantic coast of NovaScotia and St. John in southern New Brunswick.
MNP officials say marketers are working hard on piecing togethershipping contracts to support two more lateral lines on theproject’s drawing boards, to reach Prince Edward Island andnorthwestern New Brunswick.
MNP and SOEP remain cautious about predicting when potentialdemand will be translated into firm commitments in Atlantic Canada,saying they are prepared to respond to customers as they emerge.But in another proceeding under way before the NEB, MNP displaysconfidence that it is getting in on the ground floor of a healthygrowth market in Canada. High expectations show in a submission byMNP to a marathon research effort by the board to prepare anoverall forecast report on Canadian energy supply and demandthrough 2025.
MNP rates the current potential for gas use in Atlantic Canadaat 475,000 MMBtu per day – or 99% of the new pipeline’s totalinitial capacity. By the fifth year after MNP starts deliveries inNovember of 1999, Atlantic Canadian gas demand is forecast to reach340,000 MMBtu/d or 125 Bcf per year. In 15 years, consumption isexpected to be 430 MMBtu/d or 150 Bcf annually. While MNP isputting a priority on finding industrial customers, the pipelinealso anticipates a strong “core market” of residential andcommercial consumers. MNP predicts that while delivered gas willcost Atlantic Canadian consumers C$8-$9 per MMBtu (US$5.70-$6.40),it will still be 30-60% cheaper than oil, electricity or propane.
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