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Eye on Arctic gas TransCanada pitches new line across northern Alberta to gas-hungry sands Gary Park For Petroleum News
TransCanada has dropped a broad hint about where natural gas from Canada’s Arctic could end up by filing plans with regulators to build a C$983 million pipeline across northern Alberta to the oil sands region.
The system, with capacity to carry 1.5 billion cubic feet per day, is not immediately tied to the proposed Mackenzie Gas Project and TransCanada says that’s not even part of its thinking.
But the application to the Alberta Energy and Utilities Board holds out the prospect of carrying Arctic gas at some point.
TransCanada is the clear frontrunner to operate a pipeline along the Mackenzie River Valley to northern Alberta and, more recently, it has issued a thinly veiled message that it is ready, willing and able to build, own and run the Mackenzie pipeline.
For now, TransCanada’s North Central Corridor project involves a new pipeline from northwest Alberta and possibly northeast British Columbia, one of Western Canada’s hottest gas regions, to an underutilized leg of a system run by its NOVA Gas Transmission subsidiary along Alberta’s eastern edge.
However, it is positioned as part of the company’s Alberta pipeline network that extends almost to the Alberta-Northwest Territories border, giving it the option of tapping into Mackenzie gas and possibly gas from the North Slope if a pipeline from Alaska enters Alberta.
TransCanada Chief Executive Officer Hal Kvisle said the project is the “most cost-effective facility to accommodate evolving gas supply and market dynamics both within and outside Alberta.”
Expansion of Alberta system It is designed to expand TransCanada’s integrated Alberta system, providing the capacity needed to deal with increasing gas supplies in northwest Alberta, declining supply in northeast Alberta, growing intra-Alberta markets resulting largely from increased oil sands development and reduced delivery capability to interconnecting pipelines at the Alberta-Saskatchewan border.
All TransCanada will say for now is that the North Central Corridor pipeline will not need new supplies of Mackenzie gas, which could come on stream about 2014 at 800 million to 1.2 billion cubic feet per day.
But, regardless of emerging new technologies, the oil sands will rely heavily on gas to fuel its extraction and processing operations if output is to grow from 1.2 million bpd to 2.9 million bpd or more by 2015.
Over that period, gas consumption by the sector is forecast to more than double to 2.4 bcf per day at a time when Western Canadian gas is likely to decline by an even greater amount, making the development of Arctic gas even more critical.
Dan Woynilowicz, a senior policy analyst at the Pembina Institute, an Alberta-based environmental think tank, told the Financial Post the project shows “there isn’t much of a market expectation that the oil sands can move away from natural gas,” despite what the institute views as better uses for gas to offset coal-fired electricity generation.
Pending approvals, construction of the 180-mile, 42-inch diameter North Central Corridor pipeline could start in spring 2009 and be completed a year later.
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