Future shippers on the new Chicago-to-Dawn Vector Pipeline hadtheir fears confirmed last Tuesday when pipeline officialsannounced that the start-up date for the project, which wasscheduled for Nov. 1 to coincide with the start-up of thelong-awaited Alliance Pipeline, would be delayed a month until Dec.1.

Vector officials blamed the delay on the excessive rainfall thathas hampered construction of the 270-mile, 42-inch pipeline, which— when completed — would provide initial takeaway for about 700MMcf/d of the 1.3 Bcf/d of western Canadian gas that will beshipped to the Chicago market by Alliance. Alliance is due to beginoperations on Oct. 31.

After the announcement last Tuesday, Alliance officials notedthe line will have hook-ups with existing pipelines and LDCsserving the Chicago hub that could pick up some of the slackbetween Oct. 31 and Dec. 1.

Jack Crawford, Alliance vice president for public, governmentand regulatory affairs, downplayed the impact of the Vectorstart-up setback on Alliance. “We don’t think [there will be] mucheffect at all. We have been working closely with Vector. Ourconnection with them, if it’s not ready, is very close. We alsohave five other connections with other pipelines and LDCs” at theChicago hub. Many shippers “understand [that with ] a startup themagnitude of ours and Vector’s, there are likely to be some bumpsat beginning.”

The Chicago market’s reaction to the news Tuesday was somewhatunexpected. The Chicago basis for November widened from a plus9.5-10 to plus 11-12 immediately following Vector’s announcement.That was contradictory to what you would think would occur, said aChicago trader for a large marketing company. “I was offeringindex-plus gas today betting on the chance that [that] will comeoff by the time bidweek rolls around,” he said. The effect on themarket wasn’t as profound as some would have thought, agreedanother trader. “In fact, Chicago prices actually strengthened onthe news. You would think that with the excess gas on the marketstarting Nov. 1, the basis would have come off. The only thing Ican think is that people are betting on cold weather showing up inthe Chicago market on Nov. 1 as well.”

The impact was short-lived. Dawn was back down to plus 31.5-32.5Wednesday after hitting plus 36 the day before, a producer said.And a marketer reported Dawn basis being offered at plus 30.5Friday. “The panic is over,” she declared. Meanwhile, Chicago basisremained virtually unchanged around plus 11-12 through Friday,another trader said.

The Vector Pipeline will ship much of the Alliance gas from themarket hub in Chicago to the hub at Dawn, ON, as well as provideaccess to markets and storage in the upper Midwest. The line’scapacity will increase to 1 Bcf/d when the Highland CompressorStation in Michigan is completed and has the potential to beexpanded to 1.5 Bcf/d, Vector officials said. But its initialstart-up delivery capacity will be 700 MMcf/d. The pipeline isslated to serve key markets in Ontario, Quebec, and the U.S.Midwest and Northeast.

Vector shippers were notified of the delay along with the restof the market last Tuesday, although many already had suspected thepipeline wouldn’t be able to adhere to its scheduled start-up date.At an LDC forum in Chicago a few weeks ago, a spokesman for Vectorinsisted the pipeline was on schedule, but then sources said heshowed pictures of parts of the pipeline underwater. “Folks whowere there knew what that meant.”

Presently, more than 90% of the Vector line has been installedand progress on the Springville compressor station is on schedule,according to the company. The Dec. 1 start-up date allows adequatetime for any further weather impacts and for the extensivecommissioning and testing programs necessary, it said, addingVector is scheduled to begin filling its system in late October.

Sponsors of Vector include Calgary-based Enbridge Inc. with a45% interest; Westcoast Energy Inc. of Vancouver, BC, with a 30%interest; and Detroit-based MCN Energy Group Inc. with a 25%interest.

Susan Parker, Roger Tanner

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