TransCanada open season nets 1.5 PJ/d of natural gas from Western Canada

VANCOUVER (miningweekly.com) – TransCanada has successfully concluded a long-term, fixed-price open season to transport natural gas on the Canadian Mainline from the Empress receipt point, in Alberta, to the Dawn hub, in Southern Ontario, netting new long-term contracts for 1.5 PJ/d from Western Canada Sedimentary Basin (WCSB) gas producers.

The WCSB continues to boast production levels at rates that exceed current demand in Western Canada, prompting producers to increasingly look for access to markets beyond the Canadian AB-NIT market hub. Similarly, eastern markets are increasingly interested in new supplies into commercial hubs that are nearby consuming locations.

TransCanada held the open season owing to existing capacity available to one of North America's largest trading hubs, at Dawn.

The company confirmed on Monday that its recent open season resulted in binding, long-term contracts with WCSB gas producers to transport 1.5 PJ/d of natural gas at a simplified toll of $0.77/GJ.

"Today, WCSB producers are facing a much more challenging landscape than they have in the past. This new offering helps our customers compete more effectively by using existing capacity on the Canadian Mainline, and demonstrates the importance and value of this system to deliver their products to markets in Eastern Canada and the Northeast US," stated TransCanada president and CEO Russ Girling.

The term of the contract is ten years and it has early termination rights that can be exercised following the initial five years of service (on payment of an increased toll for the final two years of the contract).

The targeted in-service date is November 1. The company intends to file an application for regulatory approval with the National Energy Board in April.

“It was nice to see the level of cooperation between gas producers and TransCanada to establish a competitive toll structure that will ensure British Columbia natural gas can be delivered to Eastern Canada at a competitive cost. Today truly marks a significant step in the long-term supply of clean British Columbia natural gas to the Canadian marketplace,” British Columbia Minister of Natural Gas Development Rich Coleman said in a statement.

TransCanada transports more than 25% of the natural gas consumed across North America. The Canadian Mainline is a regulated cost-of-service system that currently transports about 20% of the natural gas produced in the WCSB to serve Canadian markets and it interconnects with the US.