Sempra Energy of San Diego, CA, will be the only game in town for gas distribution in Nova Scotia for at least 25 years now that it has the provincial government’s permission to build and operate the largest new North American gas distribution system of the last 30 years.

“This is the best opportunity to invest in a gas distribution system that we’ve seen anywhere in the world,” said Donald E. Felsinger, Sempra Energy group president. Felsinger said Sempra will enjoy a significantly higher allowable return on equity than typical U.S. gas utilities. Additionally, the franchise grants Sempra Atlantic Gas, a unit of Sempra Energy, a 20-year rate plan, five times longer than that of many U.S. gas utilities.

“A natural gas distribution system will allow the citizens of Nova Scotia to get the full benefits of their own offshore natural resources. Our plan will meet their needs, and the provincial government is offering the appropriate financial incentives to engineer the project successfully.”

Sempra Atlantic Gas earned exclusive 25-year rights to become Nova Scotia’s sole gas distributor. The company plans to spend $700 million over the next seven years to build the system, which will make gas available to 78% of the 350,000 households in all 18 counties of the province.

Gas usage on the new system will be equivalent to that of nearly one million southern Californians.

“With this project, we are essentially doubling the size of our portfolio of energy projects outside the United States and significantly broadening our international profile,” Felsinger said. “Nova Scotia offers an excellent business environment for a gas distribution system because of the province’s cold climate and large heating needs.”

Last month the Nova Scotia Utility and Review Board (URB) said it would recommend Sempra Atlantic to build the distribution system (see NGI Nov. 22). The Sempra subsidiary was chosen over Maritimes NRG and several municipalities, which sought to serve individual territories within the province. When the opportunity became available last December, two other companies (Sask Energy and Scotia Advantage) also submitted bids. These companies dropped out after the provincial government said it would let industrial customers apply for direct connections to the Maritimes & Northeast Pipeline (M&NP), which is scheduled to begin operations in early December.

Nova Scotia’s population is about 900,000. While the provincial government asked for proposals designed to deliver gas to 62% of the population within seven years of construction, Sempra’s bid outlined a plan designed to service 75% of the population within that same timeframe. The Sempra system will consist of about 4,145 miles of medium-pressure plastic main, about 870 miles of high-pressure steel main, 11 tap stations and 150 pressure-limiting stations. The overall cost is estimated at C$1.1 billion. It has been estimated that the system could eventually transport 500 MMcf/d.

Joe Fisher, Houston

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