Spectra Energy and DTE Energy team up on eastern pipeline
Gas buyers in Ontario and the U.S. team up to build a new trade route
Heightened competition is in store for western Canadian natural gas suppliers. Buyers in Ontario, Quebec and the northeastern United States will gain improved ability to shop around – eventually on an emerging global market – by a small pipeline development that bills itself as strategic.
In a construction application to the National Energy Board, Canadian and U.S. branches of Houston’s Spectra Energy and Detroit-based DTE Energy teamed up to build a new link between storage and trading hubs at Dawn in southern Ontario and the Chicago area. The locations are central collection points on a pipeline web that spans Canada, the U.S. and Mexico and connects them into a North American gas free-trade zone.
Called Dawn Gateway Pipeline, the project seeks to start increasing currently modest delivery service between the hubs by Nov. 1, 2010. “Fundamental changes” are afoot on the continental gas market, says a study done to support the scheme by ICF International, an energy consulting giant based in the Washington, D.C., area with more than 3,500 employees around the globe.
“Demand for natural gas continues to increase, primarily to serve power generation,” the study says. As the cleanest fossil fuel, gas is the top candidate to replace coal as power plant fuel under American and Canadian clean energy policies.
“In addition, North American natural gas supply patterns are shifting in response to depletion of reserves in major producing regions and development of new supply sources, including unconventional production in a variety of locations as well as increases in liquefied natural gas imports,” ICF says.
Costs of the project are not being disclosed, except in confidence to the NEB if the board demands the information. Delivery tolls set for the new link are also being kept confidential as competitive trade secrets. Rates have been negotiated with five gas merchants, whose identities are likewise undisclosed, that bought private delivery service contracts.
The proposed new construction is only a modest 17 kilometers of pipe between compressor stations in the Sarnia area on Union Gas Ltd.’s southern Ontario grid. The rest of the expanded link will be achieved by shuffling ownership of Canadian and U.S. pipelines that meet as a gas border crossing beneath the St. Clair River between Ontario and Michigan.
The plan calls for Dawn Gateway to start with modest delivery capacity of 360 million cubic feet per day. But the new link will use pipe 60 centimeters (24 inches) in diameter, enabling shipments to be rapidly and cheaply increased by adding compressors.
The project “will allow customers in Ontario, Quebec and U.S. Northeast markets to access gas from emerging supply regions like the U.S. Rockies, various U.S. Southeast shale basins and Gulf Coast LNG,” the construction application says.
Pages: 1 2
Issue Contents
Entries