A supply pool of 190 Alberta producers that sells gas to California is considering an offer to phase out long term contracts.
Alberta & Southern Gas Ltd. (A&S), Calgary, the Canadian buying unit for Pacific Gas & Electric Co., San Francisco, is scheduled to give each producer a specific buyout proposal by Jan. 6.
A&S has not revealed details of the proposal, but it seeks to end long term contracts by Aug. 1, 1994. Producers are to be offered compensation packages to cover transition costs in return for dropping the contracts. They will have until Jan. 28 to study the offers and will hold a preliminary vote on that date on whether to accept or reject the proposal.
The proposal is related to a long term dispute involving Alberta producers and regulatory demands by California's Public Utilities Commission to open the Alberta-California pipeline system to all users.
Current contracts allocate about 75% of capacity on the line operated by Pacific Gas Transmission Co. (PGT), a PG&E unit, to the Alberta supply pool. Many of the long term contracts for gas sales of as much as 1. 1 bcfd of Alberta gas to California do not expire until 2008.
The A&S proposal would offer each producer a contract on a prorata basis tied to current sales volumes and with contract term as long as 10 years.
Producers are to have the option to continue to sell gas to A&S, sell to PG&E, or sell directly to industrial buyers in California. Several producers in the supply pool, including Shell Canada Ltd., Amoco Canada Ltd., and Chevron Canada Resources Ltd., have filed lawsuits against PG&E seeking up to $400 million for alleged breach of contract.
Any agreement would be subject to approval by Canadian and U.S. regulators at several levels of government.
PGT's $1.7 billion expansion of its pipeline system is scheduled for completion in November 1993. TransCanada PipeLines Ltd. has a conditional agreement with PG&E to buy the PGT system.
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