Far from satisfied with the relatively meager returns in the gas pipeline business, TransCanada PipeLines CEO Hal Kvisle said his company plans to spend about $10 billion over the next five years on power generation projects.
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Industry Brief
The National Energy Board (NEB) has postponed the commencement of its RH-4-2001 TransCanada PipeLines Cost of Capital public hearing until Wednesday, Feb. 27, 2002. The hearing, which is expected to be long and contentious, had been slated to start Tuesday, Feb. 19. The NEB said it had decided on the postponement after considering the circumstances and arguments of the parties on a request for postponement from the Canadian Association of Petroleum Producers.
MarkWest Acquires Alberta Gathering System
Denver-based MarkWest Hydrocarbon Inc. has acquired an Alberta gathering system for C$3.1 million (US$2.0 million). The purchase includes six miles of pipelines and compression facilities that currently gather 5,500 Mcf/d. MarkWest plans to expand the system to 10,000 Mcf/d by early 2002. The new addition in southeastern Alberta is located in the Bantry field, where MarkWest already has wells and drilling locations.
Transportation Notes
Total Opal Plant tailgate nominations to interconnecting pipelines (Northwest, Kern River and CIG) will be cut by 350,000-370,000 dekatherms today due to tie-in work being performed by the operator of the Jonah Field. In conjunction with the Jonah work, Williams Field Services has scheduled a tie-in to be completed by Thursday morning, but it is not expected to required any additional reductions in nominations.
Transportation Notes
Both Duke Energy-operated pipelines, Texas Eastern and Algonquin, issued Critical System Warnings Sunday saying that based on anticipated system operations and weather conditions, all customers were required to immediately “eliminate excess receipts and conform scheduled receipts to actual deliveries.” The warnings will remain in effect until further notice. Texas Eatern noted that with unseasonably mild weather in the market area and shippers filling contract storage inventories in anticipation of the heating season, its storage capacity is now about 98% full, leaving little system flexibility. If mitigating action isn’t taken, an OFO with non-compliance penalties of $25/Dth may become necessary, the pipeline said. Without specifically mentioning a potential OFO, Algonquin said it may adjust customer nominations and/or revise scheduled quantities to halt further accumulation of imbalances. “In addition, AGT may take any actions within its operational capabilities to reduce excess receipts,” it added. No due-pipe imbalance makeup is being accepted until further notice.
Demand Void Causes Prices to Collapse to Lowest Levels in 2 Years
Pipelines across the nation were packed with gas last week, storage rose 7 Bcf to 3,107 Bcf, or 94% full, and mild temperatures cut demand virtually to zero. Gas prices Friday for weekend flows plummeted as much as 50 cents at some western locations to the lowest marks seen since 1996. Many locations averaged 30-40 cent declines on top of 40 cent drops the day prior, and with a long holiday weekend coming up and only slightly cooler weather expected in most markets, many traders and marketers feared the spot market still could lose significant ground in the days ahead.
NEB OKs TransCanada, M&NP Toll Applications
The National Energy Board (NEB) gave preliminary approval to TransCanada PipeLines Ltd.’s application for 2001/2002 tolls and tariff issues and the Mainline Service and Pricing Settlement. TransCanada is currently on interim tolls, which provide C$1.13/gigajoule for the Eastern Zone, and those tolls will remain in effect pending a final decision, said the board. The NEB also approved Maritimes & Northeast Pipeline Management Ltd.’s (M&NP) Toll Settlement Compliance Filing for final tolls effective Oct. 1, 2000 to Dec. 31, 2002, noting that the Settlement Compliance Filing (SCF) reflects tolls that are “just and reasonable” and therefore, require no more work.
Raymond James: Gas Markets Poised for Strong Rebound in ’02
In the past three months, the major pipelines exporting natural gas from Canada to the United States have begun to show significant declines in field receipts, and for the near term, Canadian gas production may mirror U.S. rates and could be peaking, according to energy analysts at Raymond James. In fact, analysts predict that Canada may have a difficult time increasing production next year to meet the incremental demand growth in the United States, “lending even more credence to our 2002 gas price forecast of $3.50.”
AGA: Natural Gas in FY 2002 Spending Bill Receives 50% Hike
The U.S. Department of Energy (DOE) has indicated that it will work with natural gas utilities and pipelines to strengthen the industry’s infrastructure and enhance reliability through a $10 million program contained in a FY 2002 spending bill, the American Gas Association said last week. The group added that the bill is nearing final approval in Congress.
Plans Revealed for Two New Powder River Basin Pipelines
Coalbed methane is booming and the Powder River Basin has the pipeline projects to prove it. Plans for two new gathering lines were revealed last week, one for a Wyoming intrastate which will have some service in place by the end of the year, and an interstate proposed by Williston Basin Interstate Pipeline Co. to travel 245 miles through Wyoming, Montana and North Dakota. In the meantime Northern Border Pipeline said it will be conducting an open season for its proposed Bison Pipeline. All three lines have a terminus in the vicinity of Gillette, WY.