The introduction of the 1.325 Bcf/d Alliance Pipeline into theNorth American gas market appears to have had less of an impact ongas flows out of western Canada than expected, according torepresentatives of TransCanada PipeLines, PG&E Gas Transmissionand Alliance. Extremely strong gas demand in the Pacific Northwest,California and in the Midwest has produced continued high loadfactors on TransCanada and PG&E GT-NW despite the presence oftheir huge new rival for Western Canadian supply.
“The contract picture changed significantly on [TransCanada]since the first of November and primarily at our Empress, AB,delivery point into the TransCanada mainline from the Alberta pipe,but actual physical mainline gas flows [at about 6 Bcf/d comparedto a total peak capacity of 7.2 Bcf/d] have not changedcorrespondingly,” said Klaus Exner, director of pipeline systemoperations at TransCanada. “The big picture overview that I wouldgive you is that demand is very high in the Pacific Northwest andCalifornia and we continue to run at the highest possible loadfactor down that leg of our pipeline system out of Alberta, throughBritish Columbia and into the PG&E systems. That hasn’t let upat all and we don’t foresee that letting up.”
PG&E Gas Transmission Spokeswoman Sandra McDonough saidPG&E GT-NW has been running full at 2.6 Bcf/d for some time andis delivering 900 MMcf/d to non-California load in the PacificNorthwest. “We’re turning back demand right now. Every power plantin this region is running full tilt. Tuscarora [Gas Transmission],the Nevada pipeline, is full. Our Northwest deliveries are fixed.We’re delivering as much as we can deliver right now.” She said thepipeline probably would be planning an expansion relatively soon.
The other two major routes out of the Western CanadianSedimentary Basin, the Foothills and Northern Border route into theMidwest and the Mainline route across the Canadian prairie inSaskatchewan and Manitoba, also continue to operate at high loadfactors.
“We didn’t see a huge drop-off in physical flows post Nov. 1.We’ve seen the IT volumes come up considerably,” said Exner. “Theone thing that has changed is the volatility of the flows.Customers are making frequent intraday nomination changes and we’reseeing more up and down and day-to-day variations, according to theweather and the markets, than we would have when we had a higherfirm contract level. The fluctuations are driven purely by theprice differential between AECO and the Dawn Hub in Ontario, whichindicates whether or not interruptible flow on the mainline is inthe money or not.”
David Cornies, TransCanada’s director of pipeline system design,said throughput on the mainline “definitely is higher than weexpected and what has happened is that demand and price are suchthat storage is flowing at very high rates and is making up thedeficiency that would result from the fuel supply loading intoAlliance.
Cumulative decontracting on TransCanada reached about 1.6 Bcf/din November. However, throughput has declined by only about 1.2Bcf/d. About 5.8 Bcf/d of gas was flowing last week at Empress, AB,on the TransCanada mainline while firm capacity under contract wasabout 5.5 Bcf/d. Additional supply in Saskatchewan brought mainlinethroughput last week to about 6 Bcf/d, which is down from about 7.2Bcf/d at the same time last year.
“We were seeing 1.6 to 2 Bcf/d of gas coming out of storage thisweek and that’s huge, so that’s a big reason why the volumes arestaying a lot flatter than we expected,” said Cornies. Fewobservers would have expected these kinds of market and weatherconditions looking back at the past three winters, he noted.
Alliance Pipeline spokesman Jack Crawford said the Alliancesystem has been running flat out at about 1.325 Bcf/d since thevalves were opened for commercial service Dec. 1. He also said thepipeline soon would be testing to increase flows on the system. Ithas been estimated that Alliance could increase gas flows to 1.5Bcf/d with existing compression. The additional capacity would bedivided up among existing shippers, Crawford said. “We haven’tcranked up the system above the contract capacity yet. We probablywon’t do that for a couple weeks until we get things ironed out.Frankly though, I’m not sure Chicago is their best market right nowgiven the pricing in the Pacific Northwest and California.”
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