CANADIAN NEB SETS HEARING ON NATURAL GAS DISPUTE

Jan. 6, 1992

Canada's National Energy Board. will begin hearings Feb. 24 on a natural gas contract and price dispute between Alberta producers and California regulators. Intervenors have until Jan. 24 to file submissions with NEB. It took no immediate action on requests by Canadian industry associations to block new spot sales to the California market. The Canadian Petroleum Association and Independent Petroleum Association of Canada have asked NEB to ban new exports that would be at the expense of

Canada's National Energy Board. will begin hearings Feb. 24 on a natural gas contract and price dispute between Alberta producers and California regulators.

Intervenors have until Jan. 24 to file submissions with NEB. It took no immediate action on requests by Canadian industry associations to block new spot sales to the California market.

The Canadian Petroleum Association and Independent Petroleum Association of Canada have asked NEB to ban new exports that would be at the expense of existing gas contracts.

The Alberta government has said it will block approval of spot sales of gas to California unless contract gas volumes have been taken from a supply pool. Canadian gas sales to California move through the system of Pacific Gas Transmission Co. (PGT), a unit of Pacific Gas & Electric Co., San Francisco.

The dispute involves a ruling by the California Public Utilities Commission that capacity on the PGT line must be open to all shippers next November. Canadian producers say that violates contracts that now allocate 75% of capacity on the system to a supply pool of 190 Canadian producers. Exports to the California market are worth about $1 billion/year.

There have been several other developments in the dispute.

Amoco Canada Ltd. has asked an Alberta court for an injunction to block a proposed sale by PG&E of its Canadian unit, Alberta & Southern Gas Ltd. (A&S), Calgary. The request is in addition to a suit filed by Amoco in the Alberta Court of Queen's Bench seeking $62.8 million in damages for alleged lost sales.

Chevron Canada Resources Ltd. has joined the list of exporters going to court with a $279 million suit against A&S. Shell Canada Ltd. earlier filed a similar suit for $70 million.

Amoco also is seeking an order to prevent A&S from buying discount gas from sellers outside its supply pool. The court adjourned the case after an initial hearing and no date has been set for a resumption.

Meanwhile, PG&E has sent an open letter to all parties in the dispute saying it will try to negotiate a settlement by June.

PG&E Vice Pres. Jerry McLeod said his company favors negotiations and indicated a new offer will be made shortly. McLeod said regulatory mandates and market conditions "require that we fundamentally restructure our agreements."