PGT, ALTAMONT PUSH THEIR PROJECTS BEFORE ERCB

The Alberta Energy Resources Conservation Board has completed a fact finding hearing on rival California gas pipeline projects. ERCB is scheduled to file a report with provincial Energy Minister Rick Orman by Apr. 30 on the competing Pacific Gas Transmission Co. and Altamont Gas Transmission proposals. The board's mandate was to gather information. It will not make a recommendation. Alberta says it will let the market decide on the projects.

April 6, 1992

3 min read

The Alberta Energy Resources Conservation Board has completed a fact finding hearing on rival California gas pipeline projects.

ERCB is scheduled to file a report with provincial Energy Minister Rick Orman by Apr. 30 on the competing Pacific Gas Transmission Co. and Altamont Gas Transmission proposals.

The board's mandate was to gather information. It will not make a recommendation. Alberta says it will let the market decide on the projects.

Submissions to the ERCB by PGT and Altamont centered largely on the economic benefits their projects would offer to producers and the western Canada economy. Gas trade between Alberta and California is worth as much as $1 billion/year.

PGT COMMITMENT

PGT Senior Vice Pres. Paula Rosput said the company, a unit of Pacific Gas & Electric Co., San Francisco, has irrevocably committed more than $400 million (U.S.) to a 75% expansion of its Alberta-California link. About half of the $1.6 billion total cost will be spent in 1992 and the balance in 1993.

PGT has begun construction on the line with pipelaying in California. Trenching and welding is under way south of Spokane, Wash.

Rosput said PGT and its parent are "exceedingly mindful" they are spending money before Canadian authorities have granted permission for Canadian gas exports. The PGT official said California customers need more Canadian gas for the 1993-94 season and regulatory delays would be extremely disruptive.

Rosput also raised the question of whether proved reserves are necessary to back up long term gas sales contracts. This is a standard requirement of Canadian regulators.

She asked why ERCB should intervene in the market if gas buyers and producers are willing to count on future discoveries to supply contract gas.

ERCB has estimated that 8 tcf of gas are available to secure new export contracts, but 11 tcf would be needed if both projects proceed.

ALTAMONT PROJECT

The Altamont group, headed by Tenneco Inc. and Amoco Canada Ltd., plans a $573 million pipeline from Alberta to connect with the Kern River Transmission system at Opal, Wyo. It plans a construction start in 1993.

Altamont estimates its shipping costs would be $360 million (U.S.) less during 30 years than PGT'S. PGT believes its project would save shippers $500-700 million during the same period, compared with its rival.

Altamont and PGT plan to complete their pipelines by November 1993. Both have made financial commitments to Nova Corp., Calgary, to cover costs of expanding its Alberta system for the export projects.

Altamont and PGT filed conflicting economic studies with ERCB from outside consultants on the economic benefits of their projects.

A study for Altamont by Brent Friedenberg Associates Ltd. says that project would net Canada $3.7 billion more than the PGT line during 20 years. But a study for PGT by Wright Mansell Research Ltd. said the PGT project would benefit Canada by $8.4 billion more than Altamont.

The studies differ on key elements such as calculation of pipeline tolls.