B.C. TO TRIM PIPELINE COMMITMENT
The British Columbia government has agreed in principle with two companies to rewrite a deal covering operation of a natural gas pipeline between the Canadian mainland and Vancouver Island.
An agreement with pipeline operator Pacific Coast Energy Corp. and Centra Gas British Columbia Inc. will reduce the government's financial exposure on the project by more than $100 million.
The undersea pipeline to the island and a distribution network were completed in 1991 at a cost of $500 million, about $150 million over projected cost.
The government's liability on the project is to be reduced to $92 million from $203 million under the original agreement.
Pacific Coast Energy received revisions to the amount of cost overrun to be included in its rate base but will earn a lower rate of return than other utilities for 5 years.
Centra Gas had liabilities for not meeting hookup targets wain,ed but will now finance costs that were previously covered under a rate stabilization fund.
The pipeline delivers gas to seven pulp mills and 17,000 residential and commercial customers on the island. Conversion from other fuels has fallen short of original projections.
Pacific Coast is jointly owned by Westcoast Energy Inc., Vancouver, B.C., and Alberta Energy Ltd., Calgary.
Copyright 1993 Oil & Gas Journal. All Rights Reserved.