CANADIAN PRODUCERS ACCEPT A&S GAS PRICE

Producers in western Canada have approved a July 31 proposal for a reduced U.S. border gas price from Alberta & Southern Gas Co. Ltd. (A&S), Calgary. The proposal covers export sales to Pacific Gas Transmission Co. (PGT) for the Aug. 1, 1991-July 31, 1992, contract year. Sales are destined for Pacific Gas & Electric (PG&E) in California. A&S currently purchases natural gas in Alberta and British Columbia from about 190 producers under 570 contracts. Its former border prices averaged about

Aug. 19, 1991

4 min read

Producers in western Canada have approved a July 31 proposal for a reduced U.S. border gas price from Alberta & Southern Gas Co. Ltd. (A&S), Calgary.

The proposal covers export sales to Pacific Gas Transmission Co. (PGT) for the Aug. 1, 1991-July 31, 1992, contract year. Sales are destined for Pacific Gas & Electric (PG&E) in California.

A&S currently purchases natural gas in Alberta and British Columbia from about 190 producers under 570 contracts. Its former border prices averaged about $1.80 (U.S.)/MMBTU. The new ones will average about $1.53.

A&S said PGT's payment of a Canadian demand charge will result in a producer netback only 1.5% less than the border price.

In other action involving Canadian natural gas exports, Canada's National Energy Board agreed to reconsider its rejection of an application for another pipeline link to U.S. gas markets by TransCanada PipeLines Ltd., Calgary. TransCanada's proposed $42.3 million, 12.4 mile Blackhorse extension in Ontario would link its gas pipeline system with the proposed Empire State Pipeline in New York state.

NEW A&S PRICES

The A&S offer accepted by producers retains a two tier structure covering three periods with all prices expressed in U.S. currency per million BTU.

During the first price period, Aug. 1 -Oct. 31, 1991, the Tier I volume of 350 MMcfd will be priced at $1.45. Tier II volumes to be taken beyond the Tier I volume will carry a price of $1.40.

During the Nov. 1, 1991 - Feb. 29, 1992, price period the Tier I volume of 600 MMcfd will be priced at $1.75. For volumes sold above the 600 MMcfd, the first 50 MMcfd will be priced at the Tier I price, while any additional volumes will be priced at the Tier II price of $1.70.

During the third price period, Mar. 1 -July 31, 1992, the Tier I volume of 300 MMcfd will be priced at $1.40. The Tier II price will be $1.35.

If the price of short-term alternative supplies available to PG&E declines to at least 100 less than Tier II prices in any month, producers will have the opportunity to approve a revised Tier II price.

A&S is seeking ratification of the producer approval by the Alberta and British Columbia governments and approval of the international contract amendment by NEB.

TRANSCANADA PROJECT

NEB earlier said TransCanada's Blackhorse line project was not needed because U.S. customers could be served by an expansion of its system at Niagara-on-theLake, 15 miles away.

In reapplying, TransCanada said circumstances have changed since NEB rejected its original proposal July 4. An alternative link proposed by Tennessee Gas Pipeline Co. that would have connected with the Niagara line has been rejected by the Federal Energy Regulatory Commission.

TransCanada asked NEB to conduct another hearing and make a decision within 15 days.

In a letter to Empire State applicants, NEB said, "The board has been persuaded by the applicants' arguments that the 9 July 1991 decision by FERC is a changed circumstance which raises a doubt as to the correctness of the board's decision and justifies proceeding with the review."

TransCanada Vice Pres. Bill Scotland said significant Canadian gas sales to New York state will be at risk if the Blackhorse extension is not approved.

In another development, the New York State Public Service Commission (PSC) underscored its continued support for the Empire State project. PSC reaffirmed its earlier decision authorizing construction of the 155 mile pipeline by saying it will deny applications for rehearing of Empire's state construction permit.

PSC, along with all other involved New York state agencies, also sent a request to NEB urging it to reverse its earlier decision and find that the Blackhorse project is in the public interest.

Designed to move an average 150 MMcfd, Empire is an intrastate pipeline that will run between Grand Island and Syracuse, N.Y. Project sponsors include subsidiaries of Coastal Corp., Union Energy Inc., and Rochester Gas & Electric Corp.