Two more reasons to sing the mainline blues
Twin developments yesterday spell bad news for TransCanada Corp. as it looks to rejig the cost of shipping natural gas from Western Canada along its beleaguered mainline.
Spectra Energy Corp. chief executive Greg Ebel surprised no one by indicating yesterday that Union Gas Ltd., the firm’s Canadian-based subsidiary, is keen to bring U.S. shale gas through its Dawn hub to markets in southwestern Ontario and Quebec.
“As market forces push you to use product that is closer to you, that makes it tougher for Western Canadian gas,” he told the Globe and Mail’s Shawn McCarthy in Ottawa.
TransCanada has proposed a broad suite of changes to reverse the fortunes of its ailing mainline, which carries gas from Empress, Alberta, to the Dawn hub in southwestern Ontario.
Tolls on the cross-country artery have spiked amid withering long-haul shipments from Alberta and British Columbia and increased competition from gas in the U.S. Rockies and Mid-Continent.
The company has proposed slashing long-haul tolls to $1.41 from $2.08 per gigajoule through a combination of cost allocation, toll design and service changes. Critics say the package amounts to a $500-million subsidy for the pipeline giant to be paid for by short-haul shippers in Alberta and B.C.
Canada’s National Energy Board will hear from both sides of the toll debate this June. In the meantime, though, TransCanada faces the prospect of LNG cargoes siphoning volumes away from the North American market.
The latest speculation surrounds Petronas, Malaysia’s state-owned oil giant. The firm’s chief executive officer, Shamsul Azhar Abbas, told Bloomberg yesterday that he had $5-billion to spend and was in the market for Canadian gas assets.