NGI The Weekly Gas Market Report
Sempra Energy of San Diego, CA, will be the only game in townfor gas distribution in Nova Scotia for at least 25 now that it hasthe provincial government’s permission to build and operate thelargest new North American gas distribution system of the last 30years.
“This is the best opportunity to invest in a gas distributionsystem that we’ve seen anywhere in the world,” said Donald E.Felsinger, Sempra Energy group president. Felsinger said Semprawill enjoy a significantly higher allowable return on equity thanfor typical U.S. gas utilities. Additionally, the franchise grantsSempra 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 ofNova Scotia to get the full benefits of their own offshore naturalresources. Our plan will meet their needs, and the provincialgovernment is offering the appropriate financial incentives toengineer the project successfully.”
Sempra Atlantic Gas earned exclusive 25-year rights to becomeNova Scotia’s sole gas distributor. The company plans to spend $700million over the next seven years to build the system, which willmake gas available to 78% of the 350,000 households in all 18counties of the province.
Gas usage on the new system will be equivalent to that of nearlyone million southern Californians.
“With this project, we are essentially doubling the size of ourportfolio of energy projects outside the United States andsignificantly broadening our international profile,” Felsingersaid. “Nova Scotia offers an excellent business environment for agas distribution system because of the province’s cold climate andlarge heating needs.”
Last month the Nova Scotia Utility and Review Board (URB) saidit would recommend Sempra Atlantic to build the distribution system(see Daily GPI Nov. 18). The Sempra subsidiary was chosen overMaritimes NRG and several municipalities, which sought to serveindividual territories within the province. When the opportunitybecame available last December, two other companies (Sask Energyand Scotia Advantage) also submitted bids. These companies droppedout after the provincial government said it would let industrialcustomers apply for direct connections to the Maritimes &Northeast Pipeline (M&NP), which is scheduled to beginoperations in early December.
Nova Scotia’s population is about 900,000. While the provincialgovernment asked for proposals designed to deliver gas to 62% ofthe population within seven years of construction, Sempra’s bidoutlined a plan designed to service 75% of the population withinthat same timeframe. The Sempra system will consist of about 4,145miles of medium-pressure plastic main, about 870 miles ofhigh-pressure steel main, 11 tap stations and 150 pressure-limitingstations. The overall cost is estimated at C$1.1 billion. It hasbeen estimated that the system could eventually transport 500MMcf/d.
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