|
CERI: TransCanada is best economic deal Research organization says company’s network is most economic means of delivering Alaska gas to southern markets By Gary Park For Petroleum News
TransCanada’s pipeline network is the best economic means of delivering Alaska gas to southern markets by taking advantage of a projected rise in unused capacity on its system, says the Canadian Energy Research Institute.
But Alaska gas is equally important to TransCanada, according to a new study of capital costs and pipeline tolls by the research organization, funded by industry and government.
It says a combination of rising consumption of gas in the Alberta oil sands and shrinking conventional output in the Western Canada Sedimentary basin will not be offset even if a liquefied natural gas terminal is operating at Kitimat, British Columbia, in 2009 and the Mackenzie Gas Project is in service by 2012 — two target dates that are no longer considered feasible.
Gas needed for export Study author Peter Howard told a Calgary meeting that North Slope gas is critical to counter the decline in volumes on Canada’s export pipelines, including the Alliance system from northern British Columbia to the Chicago area.
He noted that as those volumes go down the tolls “go through the roof.”
CERI estimates that initial Alaska volumes of 4.6 billion cubic feet per day would need an average transportation toll of C$1.35 per thousand cubic feet for both TransCanada’s pipeline from Alberta to Eastern Canada and its Alberta/Foothills-Northern Border systems into the United States.
The Alliance pipeline tariff from the Alberta hub at Boundary Lake — where the TransCanada-Foothills Pipe Lines system from the North Slope would end — to the Chicago area would be C$1.61 per thousand cubic feet if Alliance were to handle 100 percent of Alaska gas.
C$2.73 per mcf to Boundary Lake CERI estimates that getting gas from the North Slope to Boundary Lake, based on a capital cost of C$30.8 billion would be C$2.73 per thousand cubic feet including fuel.
An initial volume of 800 million cubic feet per day for a Mackenzie Valley pipeline would carry an average five-year toll of C$2.45 per thousand cubic feet, assuming a capital outlay of C$7.8 billion.
CERI figures that TransCanada could handle 4.6 bcf per day of Alaska gas for a capital cost of C$1.8 billion to expand its Nova Gas Transmission system in Alberta, while no additions would be needed for its various links to eastern Canada and the United States.
If Alliance were to carry 100 percent of Alaska volumes, the study estimated it would have to spend C$13.7 billion enlarging its 1.6 bcf per day pipeline.
The study also compared costs for two options involving the use of both TransCanada and Alliance for Alaska gas.
If TransCanada were to take 60 percent its expansion costs would be C$1.5 billion at a five-year expansion toll of C40 cents. At 40 percent the capital spending would be C$1.2 billion and the expansion toll would be C42 cents.
A 60 percent share for Alliance would involve capital costs of C$10.1 billion and tolls of C$1.83, while 40 percent would need C$7.6 billion and tolls of C$2.
If it is unable to secure Alaska gas, TransCanada’s mainline could fall below 2005 levels of 6.82 bcf per day by 40 percent in 2010, 53 percent in 2015 and below Canadian demand by 2020.
On TransCanada’s Alberta network tolls, estimated at C35 cents last year, would rise to almost C50 cents by 2024 in the absence of Alaska gas as volumes shrink from 15 bcf per day in 2015 (including Mackenzie gas and Kitimat LNG imports) to 9 bcf per day in 2024.
| 