TransCanada lowers gas toll to Ontario
• TransCanada Corp. officially launched its plan to push U. S. natural gas out of southern Ontario Thursday by offering domestic gas producers lowerthan- expected tolls on its underused mainline pipeline system.
TransCanada asked domestic natural gas producers Thursday to formally commit to shipping 1.5 billion cubic feet per day of their gas — representing about 10 per cent of gas produced here — from Alberta to Ontario. In exchange, TransCanada will cut its tolls roughly in half — from $1.41 per gigajoule now to between 75 cents and 82 cents per GJ.
The Calgary- based pipeliner is proposing a toll reduction in an effort to send more gas from Western Canada to its traditional market in southern Ontario, while reclaiming market share from increased gas shipments from Pennsylvania’s prolific Marcellus formation.
“Western Canada has supplied those markets for decades and to the extent that other sources of supplies push in, that compromises the economic climate in Western Canada,” said Stephen Clark, TransCanada’s senior vice- president and general manager of natural gas pipelines. “That’s what this is all about.”
The t ol l s announced Thursday are lower than the 82-cent to $1.10 per GJ range TransCanada suggested it could offer a month ago. GMP FirstEnergy analyst Ian Gillies said the new tolls will allow TransCanada to compete directly against two other pipeline proposals that would move more U. S. gas from Pennsylvania to Toronto and area.
Gillies said in a research note TransCanada’s proposal calls for 10- year commitments, with the option to cancel the arrangement early, compared with 20and 15- year commitments on Energy Transfer Partners LP’s proposed Rover pipeline and Enbridge Inc.’s Nexus pipeline.
If domestic gas producers take TransCanada up on its offer, the pipeline company hopes to begin shipping that gas to Ontario by 2017 — beating the Nexus and Rover shipments to the market. “We have existing infrastructure in the ground,” Clark said.
“They’re going to have to be competitive with tolls out of the Utica ( gas formation) and the Marcellus,” said Ed Kallio, a gas consultant and principal at Eau Claire Energy Advisory Inc.
Kallio said it was a “very good thing” that TransCanada responded to feedback from natural gas compan- ies in Calgary and adjusted their toll proposals over the past month as it could allow domestic producers to compete with U.S. gas in Ontario, where Canadian gas has been losing market share for years.
Clark said that in years past TransCanada would export 1.5 bcf/d from Canada into the U. S. through an export point near Niagara Falls.
Now, gas shipments of 1 bcf/d are being imported into Canada through the same point.