U.S. shale gas could displace Canada gas

The explosion in shale gas across North America may have some negative consequences for Western Canadian producers, who have dominated markets in Ontario for 50 years.

The prospective flood of new gas from the Marcellus shale in Pennsylvania and West Virginia may find its way into Canada’s most populous province, which consumes 2.5 billion cubic feet per day of gas, mostly from Alberta and Saskatchewan.

TransCanada and utility company Union Gas are holding an open season to assess the interest of Marcellus producers in shipping gas to Ontario, accessing existing pipelines that currently move gas from Western Canada to southern Ontario and the U.S. Northeast.

A spokeswoman for Union Gas, a subsidiary of Spectra Energy, said the Marcellus shale is a “game changer in terms of our markets and how we serve them.”

TransCanada said it is responding to requests from Marcellus producers, but only the open season will show whether there is enough interest to change the flow of the New York-based Empire Pipeline.

Estimates of potential output from the Marcellus formation range from 2.5 bcf to 10 bcf per day by 2020.

—Gary Park