With the Alberta government’s consent, TransCanada Corp. is preparing to change the face of the western natural gas pipeline industry. Alberta’s Nova network is set to make a historic switch to federal supervision. The transfer will enable construction of the first Nova extension beyond Alberta. The new line will collect mammoth volumes of new shale gas production developing in northeastern British Columbia.

Outlines of the grand design emerged at hearings before the National Energy Board late last fall in Calgary. The sessions focused on the plan’s legal and political side, which is a request by TransCanada for the NEB to take jurisdiction over Nova’s lines and tolls away from the Alberta Utilities Commission.
The jurisdictional switch is unopposed by the provincial government and will end half a century of at times fiercely protected Alberta control over Nova’s evolution as an independent service. The company was chartered by the legislature to build a pipeline network capable of looking after Alberta production and royalty interests.

The Nova grid matured into a gas counterpart to the post office with 23,500 kilometers of lines. The arrangement enabled producers to shop around for markets as a neutral transportation intermediary between their wells and long-distance pipelines.

For most of the Alberta industry’s history, the big transmission systems to Central Canada, the middle-western United States and California were dual monopolies that owned both the delivery service and the gas in their lines. Nova was invented as Alberta Gas Trunk Line to stop national or international pipeline giants from building extensions into Alberta. That prospect was opposed as liable to set up a third monopoly layer –domination of gas-producing regions by single buyers, giving out-of-province companies power to control wellhead prices and depress provincial royalties.

The dual monopolies were broken by the 1985 Western Accord on Energy between the federal, Alberta, Saskatchewan and B.C. governments. On top of scrapping Ottawa’s 1980 National Energy Program, the pact made long-distance pipelines grant transportation services to all who produce, own or trade gas on a first-come, first-served basis. The corporate giants had to create separate, competitive marketing arms to manage any supplies that they kept on buying and selling.

The accord brought Canada into line with gas market deregulation in the United States, which was implemented gradually in the 1980s through bewilderingly complicated legal and regulatory conflicts over details. The dismantling of long-distance pipeline monopolies also made it possible for TransCanada to buy Nova in 1998 without facing Alberta government opposition to the takeover and almost certain defeat in a mandatory regulatory review by provincial authorities.

Alberta Energy Minister Mel Knight described the proposed jurisdictional switch as a logical and acceptable next step in gas industry evolution when TransCanada filed its application with the NEB in 2008. A ruling is due in early 2009, including a decision on when to make the switch effective.
Nova should become a federal concern as soon as a construction application is filed with the NEB to build a pipeline extension across the border into B.C., Alberta Energy regulatory affairs director Jill Page told the hearings. “Things have changed. The Western Canada Sedimentary Basin [production] is expanding,” she acknowledged.

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