NATURAL GAS CLAIMS SPOTLIGHT IN CANADIAN INDUSTRY

Natural gas is accounting for an increasing volume of news in Canada. Here are the latest developments among Calgary companies: Alberta & Southern Gas Ltd. (A&S) and its 190 member supply pool agreed on new gas purchase/sale contracts effective Aug. 1. The deal followed several rounds of negotiations. It was approved on the third ballot by members of the supply pool representing more than 60% of total gas volumes.

Aug. 9, 1993

4 min read

Natural gas is accounting for an increasing volume of news in Canada.

Here are the latest developments among Calgary companies:

Alberta & Southern Gas Ltd. (A&S) and its 190 member supply pool agreed on new gas purchase/sale contracts effective Aug. 1. The deal followed several rounds of negotiations. It was approved on the third ballot by members of the supply pool representing more than 60% of total gas volumes.
Pan-Alberta Gas Ltd. earlier agreed in principle to buy A&S, the gas buying arm of Pacific Gas & Electric Co. (PG&E), San Francisco, from NoN,a Corp. and Alberta Energy Ltd. The deal hinged on successful restructuring of the contract between A&S and Alberta producers.
Nova reported an 11.4% increase for delivery volumes in its Alberta gas pipeline system in first half 1993. The company said volume in the system that transmits Alberta gas to Canadian markets and export points to the U.S. handled 1.86 tcf compared with 1.67 tcf in first half 1992.

A&S CONTRACT

The A&S contract with producers, covering four blocks of gas volumes, calls for flexible pricing that will be adjusted under a set of price indexes tracking seasonal chances in demand. A&S said a similar price system produced a net average price of about $1.90/Mcf in the first 10 months of the current contract year.

The agreement carries three seasonal price periods: August-November, December-March, and April-July.

The first volume level, designated Block A, is the first gas purchased for PG&E's core market. It has a fixed seasonal monthly average volume commitment of 260 MMcfd in the two nonwinter periods, Aug. 1, 1993-Nov. 30, 1993, and Apr. 1, 1994-July 31, 1994, and 400 MMcfd in the winter, Dec. 1, 1993-Mar. 31, 1994.

Prices are set according to a weighted index of 1 month gas prices in the U.S. Southwest, reduced by an adjustment of 5.6 (U.S.)/MMBTU to reflect the estimated difference in the delivered cost of Canadian and U.S. Southwest gas.

Block B gas is to be taken as needed to a maximum of 300 MMcfd in winter period and 200 MMcfd in the nonwinter periods. Prices are determined according to a weighted index of daily gas prices in the U.S. Southwest, reduced by 2% to bring this block as much on par as possible with PG&E's Southwest supply alternatives.

Block C gas also is taken as needed, after purchases from Blocks A and B, to a maximum of 50 MMcfd in the winter and 200 MMcfd in nonwinter. Prices will be determined according to a modified index of daily gas prices in Alberta.

NOVA THROUGHPUT

Nova's deliveries were up to all markets served by its system this year. Deliveries averaged 16.3 bcfd.

Gas transported within Alberta in the first half of this year was up 15.3% from the same period in 1992.

Exports were up 14.417, at the Empress border point, 6% at the McNeill point and 2.8% at the Alberta-British Columbia border point.

Nova ships gas to Alberta border points for export to markets in Central Canada, as well as the U,S. Midwest, Northeast, and California.

PIPELINE EXPANSION

Meanwhile, the final links in a pipeline expansion to serve California gas markets are being completed in Canada and the U.S.

The project by Pacific Gas Transmission Ltd. will cost an estimated $1.92 billion in the U.S. and Canada and increase capacity of the current Alberta-California pipeline link by more than 75%. In Canada, Nova, Alberta Natural, and Foothills Pipe Lines Ltd. are involved in the project.

The expansion, scheduled to be in operation by Nov. 1, will be able to move 900 MMcfd from Alberta to markets in California and the L.S. Pacific Northwest.