NGI The Weekly Gas Market Report

The National Energy Board (NEB) will hold a public hearing on an application from TransCanada PipeLines Limited concerning 2001/2002 tolls and tariff issues. The NEB said the public hearing will commence on Aug. 20. Written interventions must be filed with the board by July 10. The need for a hearing began in April of this year when TransCanada and certain stakeholders reached an agreement on the terms of a settlement. The proposed settlement related to all tolls and tariff matters for the years 2001 and 2002, excluding cost of capital issues. The NEB said the settlement became effective on the first of January and established a toll methodology to be utilized for both 2001 and 2002, tariff provisions to be applicable in that time period, and the components of the revenue requirement (other than cost of capital) to be used in the calculation for final tolls for 2001. On June 6, TransCanada filed an application for the approval of the cost of capital to be included in the calculation of its mainline tolls for the years 2001 and 2002. The board said it will announce at a later date the process for dealing with that application. In May, the board had requested comments from interested parties on the substance of the tolls application as well as the need for and nature of a further process. The board decided that TransCanada’s settlement was not in accordance with the board’s guidelines for negotiated settlements of traffic, tolls and tariffs. The board directed TransCanada to advise whether it wished to file an amended application or have the board treat the application as a common position of parties. TransCanada advised the board that, after communicating with all of the signatories to the proposed settlement, it had decided not to file an amended application and requested that the board establish a process to consider the application as filed. For further information on the Aug. 20 hearing visit the NEB’s web site at www.neb-one.gc.ca.

As the five-week-old hearing into whether El Paso Natural Gas manipulated gas prices in California last year wound down at FERC last Tuesday, a war of words erupted over just how much transportation on the pipeline was unavailable to customers during 2000 for reasons other than operational factors.

Despite exorbitant price spikes in natural gas and deregulation setbacks in various markets around the country, a new study released by the American Gas Association (AGA) revealed that an increasing number of small businesses and other commercial customers are purchasing their natural gas supplies from someone other than the local utility, continuing the evolution of competition in the natural gas industry.

Encouraged by the results of recent market tests, El Paso Natural Gas announced two binding open seasons last week for 400-500 MMcf/d of firm transportation capacity on a bi-directional lateral it plans to add to its system within California. It also plans to announce soon additional binding open seasons to expand its mainline.

Confirming plans announced two weeks ago by Westcoast Energy CEO Michael Phelps, Maritimes & Northeast Pipeline said last week it has signed agreements with PanCanadian Petroleum Corp. to transport up to 400 MMcf/d of gas from PanCanadian’s C$1 billion Deep Panuke project offshore Nova Scotia to markets in Atlantic Canada and New England (see NGI, June 18).

After months of planning and market tests for a proposed expansion of its gas storage facility in Butte County, CA, Wild Goose Storage Inc., a subsidiary of Alberta Energy Co. Ltd., filed an application with the California Public Utilities Commission last week to double the field’s size and triple the withdrawal capacity.

Driven by North America’s growing thirst for natural gas and more drilling worldwide, Salomon Smith Barney revised its worldwide rig count forecast upwards by 30% and grew its estimated exploration and production midyear spending projections by 25%, predicting 22% more growth in North America alone. U.S. spending, propelled by aggressive independents, is at a higher pace than at any time in almost 20 years.

Drawing parallels between the natural gas industry’s efforts several years ago to create seamless gas markets, FERC Commissioner William Massey last Tuesday called on the electric power industry to develop regional transmission organization (RTO) interregional coordination standards by the end of this year. In the absence of industry action on this front, FERC will have to take matters into its own hands, Massey warned during a technical conference.

The implementation of price-cap proposals intended to aid California’s beleaguered wholesale electricity markets could lead to a significant rise in the number of power outages in the state this summer by reducing available generating supplies, according to a new report issued by the Department of Energy’s (DOE) Office of Policy. It warned that a $150/MWh “hard cap,” which some Capitol Hill lawmakers had endorsed, could idle as much as 3,600 MW of natural gas-fired capacity in California, depending on the price of natural gas this summer.