The next challenge to the troubled Canadian natural gas pipelineestablishment opens May 25, when the National Energy Board hasscheduled the start for hearings on AEC Suffield Gas Pipeline.
The proposal, mounted by a pipeline arm of Alberta Energy Co.,calls for a bypass of Nova Corp.’s Alberta grid in one of the mostprolific production areas in Canada. Promised tolls are as much as40% less than Nova rates.
AEC plans a 114-kilometre (70-mile) line to carry an initial 200MMcf/d from the gas-rich Suffield Military Range in southeasternAlberta across the boundary with Saskatchewan to a connection withTransCanada PipeLines at Burstall. The boundary crossing putsjurisdiction in the hands of the NEB and away from the AlbertaEnergy and Utilities Board, which has a long history of enforcingNova’s franchise.
Suffield Pipeline, to be built across easy prairie terrain for amodest C$26 million (US$19 million), proposes tolls ranging fromC14.7 cents (US10.7 cents) for 20-year transportation contracts toC17.5 cents (US12.7 cents) for five-year subscriptions.
The tolls are not only as much as 40% off Nova’s postage-stamprate of about C25 cents (US18.2 cents), but also AEC is pledging”long-term rate certainty,” with charges guaranteed to stay thesame for the life of shipping contracts. AEC, as dominant producerin the Suffield region, has booked about 70% of the capacity on thebypass.
The commitment to toll stability is a sharp contrast to theoutlook for Nova. It is still in negotiations with the shippercommunity over passing on costs of a settlement that put a stop toan earlier bypass challenge in the same region by Palliser PipelineProject.
Palliser’s sponsors, led by PanCanadian Petroleum, shelved theproject in trade for discounted rates that Nova dubbed LRS or “loadretention service.” After long, hard-fought hearings, the Albertaboard this winter authorized Nova to pass on 75% of LRS costs toits entire community of shippers.
A final settlement on LRS costs is still awaited. At the sametime, Nova has repeatedly warned that its traffic, finances andpotentially rates will be affected by a far bigger bypass -Alliance Pipeline Project’s proposed route to Chicago fromnortheastern British Columbia across northern Alberta andSaskatchewan. Nova and its merger partner in waiting, TransCanada,continue to fight Alliance in marathon hearings before the NEB.
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