Fresh competition has emerged for TransCanada PipeLines Ltd.’sNova gas-gathering grid in Alberta — this time from its neighborto the east in Saskatchewan.

Representatives of provincial government-owned SaskEnergy’spipeline web, TransGas Ltd., took gas industry leaders out to alavish dinner in Calgary to launch an aggressive sales pitch. “Dareto compare,” the campaign urged prospective shippers.

“We think the economics are there,” said president Ron Clark.”We think the opportunities are there. We’d like you to be there.”TransGas suggested it is putting real new value on the Canadian gastable because, having escaped trauma that forced Nova into anoverhaul, the Saskatchewan route still has low, stable rates. Whilemuch smaller than Nova, as befits Saskatchewan’s distant thirdplacing on the Canadian production scale after Alberta and BritishColumbia, TransGas pointed out it is a substantial service thatincludes alternative routes. The 45-year-old system carries up to1.4 Bcf on peak days and has 32 Bcf of storage capacity.

The 8,400 miles of TransGas gathering and transmission linesinclude 11 spurs to various points on Alberta’s eastern boundary.An affiliate, Many Islands Pipe Lines (Canada) Ltd. — regulatedby the National Energy Board instead of Saskatchewan authorities,as an interprovincial service — reaches about 50 miles intonorth-central Alberta. Besides TransCanada’s long-distancemainline, the TransGas web interconnects with theFoothills-Northern Border and Williston Basin Interstate systems.

Nova continues to work before the Alberta Energy and Utilitiesboard on implementing a new, distance-based rate system forced onit by bypass projects and competition in its back yard.TransGas-only about 10% as big as Nova, which continues to carryabout four-fifths of Canadian production-has so far attracted nosuch forces for change. As a result, the Saskatchewan grid stillhas a postage-stamp toll, the same no matter how far gas travels onit, of C24 cents/Mcf (US16 cents).

Under Nova’s new structure, gas produced in southern Albertawill travel for much less than the TransGas postage-stamp rate. Butfarther north, such as in the region penetrated by Many Islands,staying on Nova is expected to cost C38-39 cents (US25.3-26 cents),or nearly 60% more than switching to the TransGas system. Clarkestimated that producers able to make the change can save as muchas C$2.5 million (US$1.7 million) a year on shipments of 50 MMcf/d.The Saskatchewan system is guaranteeing its rates will stay frozenin 2000 and 2001 – “and we anticipate stability beyond 2001,” Clarkadded.TransGas is also offering to build tie-in connections at nocharge to gas producers.

In Calgary, producers described pipeline competition as alwaysgreat news in a Canadian shipper community that until recently wasaccustomed to a lack of it. The TransCanada organization, with astiff upper lip that has become its trademark as pipeline rivalryaccelerates, repeated it welcomes competition provided there is alevel playing field. TransGas launched a series of marketingmeetings. The system has been carrying 325 Bcf/year – a dailyaverage 890 MMcf which is 36% below its peak capabilities of 1.4Bcf.

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