TransCanada Pipelines Monday canceled part of its C$403 millionsystem expansion project on its Canadian Mainline because of aninability to resolve negotiations with a local tribe of Indians,yet the pipeline company insists other parts of the expansion willcontinue. TransCanada would not disclose the nature of thedisagreement except to say the parties could not resolve aboriginaland treaty rights issues as well as future economic opportunityissues.
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Westcoast Energy said its subsidiary St. Clair Pipelinessubmitted an application to Canada’s National Energy Board forconstruction of the Canadian portion of the TriState PipelineProject, which would provide 450 MMcf/d of new firm transportationcapacity from the Chicago Hub through Indiana and Michigan to theDawn Hub in Ontario. Project partner CMS Energy filed anapplication for the U.S. portion in November of last year.Westcoast has a 33.3% stake in TriState.
TransCanada Midstream (TCM), a business unit of TransCanadaPipeLines Ltd., bought Alberta Energy Co.’s (AEC) outstandingshares (49.995%) in PanAlberta Resources Inc. (PARI) for $35million plus about $7 million in assumed debt. PARI owns 50% of theEmpress II straddle plant and holds gas liquids extraction rightswith respect to gas volumes of Pan-Alberta Gas Ltd.
Westcoast Energy said its St. Clair Pipelines subsidiary filedthe last major component required for the Millennium Pipelineproject yesterday with the National Energy Board in Canada. Thecompany filed an application for a $165 million pipeline that wouldlink Union Gas’ Dawn Hub in Ontario to lake crossing facilities tobe built by TransCanada. TransCanada filed an application for thelake crossing facilities earlier this week. St. Clair’s 50-mileMillennium West Pipeline would deliver about 700 MMcf/d of gas toPatrick Point on the shores of Lake Erie.
TransCanada PipeLines has filed an application with the NationalEnergy Board (NEB) to build a 61-mile, 36-inch diameter pipelineacross Lake Erie. The line would provide the upstream supplyconnection for the proposed Millennium Pipeline project, whichwould extend to New York City.
In its first report to shareholders since completion of itsmerger with Nova Corp., TransCanada PipeLines reported net incomefrom operations dropped to $139 million in the third quarter from$157 million in the third quarter of 1997, yielding net income pershare of 30 cents, down from 34 cents in the year-ago period.Revenues were up, however, to $4.43 billion from $3.91 billion.
TransCanada PipeLines Ltd., subsidiary Nova Gas Transmission andtwo groups of Canadian producers yesterday announced a “watershed”proposed agreement for a new pricing structure aimed at increasingthe competitiveness of the Nova system while at the same timeensuring greater rate fairness for producer-customers on thepipeline.
In another case the FERC is going to have to defend its policyof not requiring pipelines to flow through penalty revenues, theU.S. Court of Appeals ruled Friday in remanding a case involvingNorAm Gas Transmission (No. 97-1607). The 2-1 decision in Amoco v.FERC, with Judge Randolph concurring in part and dissenting inpart, did not object to NorAm’s raising penalty rates, but it doesask for an explanation of why the Commission believes penaltyrevenues will be so insignificant as to warrant no consideration.In the year prior to NorAm’s rate filing the pipeline had collected$1.8 million in penalty revenue. The court noted FERC appeared tobelieve that because penalty rates were raised, the incidence ofpenalties would decrease. But “even if a lesser number of penaltiesare imposed, the increased penalty rate might result in a grossincrease in penalty revenue. Moreover – and this is the keyimponderable – whether a shipper will be willing to incur thepenalty depends on his cost in securing alternative supplies in atight market.”
Three weeks of severe weather in the Gulf of Mexico have leftproducers with their heads spinning and have sent Gulf productionon a roller coaster ride, but producers should find some solace inthe large number of pipeline companies scrambling to serve theirgrowing transportation needs with new projects. In total, the newpipeline expansions announced last week could add more than 1 Bcf/dof additional pipeline access to markets for deep-water supplies.