A toll cut on TC Energy Corp.’s cross-country Mainline enabled Western Canada natural gas to regain Ontario and Quebec sales last year in competition with Lower 48 supply, according to a Calgary economics agency.

Eastbound gas from Alberta and British Columbia (BC) partially refilled the national pipeline with a 2018 traffic increase of 400 MMcf/d or 15% to 3.1 Bcf/d, the Canadian Energy Research Institute (CERI) said.

In its review of production, supply costs, carbon emissions and economic benefits, CERI credited the gas delivery gain to a TC bargain toll for 1.4 Bcf/d from 23 shippers: C77 cents/gigajoule (61 cents/MMBtu), more than half off the C$1.86/GJ ($1.46/MMBtu) standard rate.

“This measure gives Canadian gas a chance to be cost competitive in eastern gas markets,” said CERI.

However, Alberta and BC gas remains far from fully winning back the former role as the sole Eastern Canada supply source.

Because the Marcellus Shale is close to Ontario and Quebec, “the eastward throughput of the TC Energy Mainline fell from 6 Bcf/d in 2006 to 2.7 Bcf/d in 2017,” noted CERI.

Low-cost Lower 48 gas exports still achieved Eastern Canada sales exceeding 2 Bcf/d, the research agency noted.

Growth prospects that CERI is forecasting for Alberta and BC supply depend on unpredictable customers: Alberta thermal oilsands production, liquefied natural gas (LNG) exports and power generation.

CERI rated four LNG export terminals on Canada’s Pacific and Atlantic coasts as conceivable assumptions for economic modeling purposes. The agency, however, made no firm predictions about new project successes as only a single terminal has been sanctioned to date, the Royal Dutch Shell plc-led LNG Canada facility near Kitimat, BC.

Canada’s gas-burning oilsands export growth specialty, discount-priced heavy crude, still has U.S. opportunities if stalled pipeline projects break through barriers erected by fossil fuel opponents in regulatory agencies and the courts, noted CERI.

In addition to supply replacement openings left by declining Venezuelan and Mexican output, U.S. production of high-grade oil, as well as natural gas, also has created an economic incentive to increase Lower 48 oil imports from Canada, it said.

“Because the U.S. has allowed oil exports effective 2015, it can now monetize its light shale oil at the premium price in export markets, while refining cheaper, heavier oil domestically,” said researchers. “This model allows for sustaining and even increasing Canada’s oil exports to the U.S.”