A battle brewing in toronto could decide the future of canada’s natural gas industry _ financial post

CALGARY – After years of losing market share to U.S. Gas and supply okc competitors, Canadian natural gas producers and one pipeline company are looking for a way to fight back and regain their traditional market of Toronto, the country’s biggest consumer for residential power and heat.

The battle to sell natural gas into Toronto and the surrounding area pits Calgary-based TransCanada Corp. Electricity prices going up against Dallas-based Energy Transfer Partners LP, which wants to build a new pipeline called Rover from a prolific gas formation in Pennsylvania to southern Ontario, and Houston-based Spectra Energy Corp., which has proposed the Nexus gas pipe to Ontario. Gas house edwards co Spectra, of course, was purchased this week for $37 billion by TransCanada’s old rival, Enbridge Inc.

The issue of whether Canadian gas can compete with U.S. Electricity grid australia gas is at the heart of the fight for access to the Toronto and southern Ontario markets. O gastronomico Lower-cost natural gas from nearby Pennsylvania has pushed domestic supplies out of Ontario for years and Canadian producers hope TransCanada’s offer to cut the tolls on its existing pipeline system to Dawn, Ont., can reverse that trend before the U.S. Gas vs diesel engine producers sign multi-year commitments for their proposed pipelines.

“I have been more than surprised that we gave up the strategic Eastern Canadian gas market almost without a fight,” said Questerre Energy Corp. Electricity joules chief executive Michael Binnion.

After discussions this summer with many oilpatch executives, TransCanada is taking up that fight and actively looking to spoil the plans of both U.S.-routed pipelines.

TransCanada spent the summer gauging the interest among gas companies to ship more of their production to Canada’s largest centre and it has offered to cut tolls on its line by 40 per cent to make that happen.

Since pipeline contracts are usually struck for terms of 10 years or more, “The decisions that we will be making here in the next few weeks and months will have a large effect on Western Canada and Eastern Canada for decades to come,” McMillan said.

Jackie Forrest, vice-president of energy research at ARC Financial Corp., said the southern Ontario and Quebec markets consume an average of 3 billion cubic feet of natural gas per day, which is not a large enough market to support TransCanada, Nexus and Rover all delivering volumes to the Dawn, Ont., natural gas pricing hub.

“If you look at the size of the market, it’s difficult to see them both going forward with the volumes they’re putting forward right now,” Forrest said.

Asked whether the Nexus pipeline was a priority for Enbridge after its merger with Spectra, spokesperson Todd Nogier said in an email that the company “undertook significant due diligence on Spectra’s portfolio of secured and potential growth and are very excited about integrating their development into the combined entity.”

Edward Jones analyst Rob Desai said Nexus would be a high priority for Spectra and now Enbridge, “because if you look at the timeline, it’s a project they hope to complete in the next couple of years.”

BMO Capital Markets analyst Danilo Juvane said in a research note that “TransCanada’s official proposal to lower its mainline tariffs from Empress (Alberta) to Dawn puts (both competing U.S. La gastronomie pipeline) projects on the hot seat given expectations for a deluge of gas supplies into Dawn.”

The company has offered to slash tolls between Empress and Dawn to 82 cents per gigajoule from $1.41 per GJ if producers agree to ship an additional two bcf/d on the mainline. Gas mask bong nfl If gas companies agree to ship less than that, the tolls wouldn’t drop as far: TransCanada would charge 90 to 95 cents if shippers agree to move 1.5 bcf/d and $1.10 if total shipments are one bcf/d.

It is possible that some Albertan producers will not take TransCanada up on its offer, especially those shippers that use the interruptible service model.

Darren Gee, chief executive of Peyto Exploration and Development Corp., said TransCanada will need to change the type of service it offers on the mainline to attract more producers.

Gee, who runs the lowest-cost natural gas producing company in Western Canada, said he’s frustrated with TransCanada’s outages on another pipeline network, the Nova gas transmission system, because Peyto and other producers pay for space on the line even when it’s out of service.

“You still pay for service even though they’re not taking your gas,” he said. Gas dryer vs electric dryer cost savings “That kind of experience and frustration that we’ve had over the last year would play into a decision over taking additional mainline service, because, obviously, if you can’t get your gas on the system in Alberta, it’s never going to get on the system where it joins the mainline.”

Gee said Peyto markets all its gas in Alberta, but added that reduced tolls could help Canadian producers compete in Ontario if TransCanada is able to amend its offer.

Enbridge and Veresen Inc. Year 6 electricity worksheets recently cut tolls on their jointly owned Alliance natural gas pipeline to Chicago and changed the structure of their tolls on the line to reduce the risk for gas producers to use the line.

That line is now full and analysts say TransCanada could refill its mainline using the same tolling structure, allowing Canadian companies to compete in Toronto the way they now do in Chicago.

“Based on what’s come out in public filings, it seems like the proposed tolls for TransCanada would be competitive with what we would be seeing from the Marcellus area into Dawn using the Nexus pipeline,” she said.