ADDED SUPPLIES OF CANADIAN GAS SCHEDULED FOR SHIPMENT TO MARKETS IN U.S. NORTHEAST

More Canadian natural gas is destined for export to the U.S. In a deal it calls the largest direct gas purchase organized in the U.S., Alberta Northeast Gas Ltd., New York, signed 15 year purchase contracts with Canadian suppliers for delivery of about 400 MMcfd to the U.S. Northeast. Deliveries are expected to begin by next winter. Alberta Northeast is a combine of 16 natural gas distribution companies in New York, New Jersey, and New England.

Feb. 18, 1991

4 min read

More Canadian natural gas is destined for export to the U.S.

In a deal it calls the largest direct gas purchase organized in the U.S., Alberta Northeast Gas Ltd., New York, signed 15 year purchase contracts with Canadian suppliers for delivery of about 400 MMcfd to the U.S. Northeast. Deliveries are expected to begin by next winter.

Alberta Northeast is a combine of 16 natural gas distribution companies in New York, New Jersey, and New England.

In another deal, Natural Gas Clearinghouse (NGC), Houston, and Pan-Alberta Gas Ltd., Calgary, formed a direct marketing joint venture for sales of U.S. and Canadian gas in California.

And in still another trade that could ultimately tap Canadian gas supplies, Amoco Corp. unit Amoco Energy Trading Corp., Houston, agreed to sell Shell Western Exploration & Production Inc. as much as 25 MMcfd of gas for 10 years from Amoco Production Co. fields in the Rocky Mountains.

Canada's National Energy Board earlier removed some remaining restrictions on short term gas export contracts with U.S. buyers.

The board said applications for export licenses will no longer be required to specify the points on the international boundary where gas enters or leaves Canada. Permits will be valid for all pipeline crossings.

NEB also removed a restriction that automatically terminated export and import licenses if no gas flowed under them within 180 days of being granted.

The additional deregulation moves apply to export sales contracts for terms of less than 2 years.

ALBERTA NORTHEAST

These Canadian companies will supply natural gas to Alberta Northeast: Western Gas Marketing Ltd. 275 MMcfd, ProGas Ltd. 66 MMcfd, Atcor Ltd. 37.3 MMcfd, and AEC Oil & Gas Co. 18.8 MMcfd.

Preliminary purchase agreements with the gas suppliers were executed in 1986. NEB approved the export licenses for Alberta Northeast in 1987. The U.S. Department of Energy approved the import authorizations for the gas last November, 1 day after the Federal Energy Regulatory Commission approved Iroquois Gas Transmission System's application to lay and operate a pipeline to transport Alberta Northeast and other gas.

The gas will move through TransCanada PipeLines Ltd. in Canada for delivery to Iroquois. In addition to Iroquois, Tennessee Gas Pipeline Co. and Algonquin Gas Transmission Co. will provide transportation services in the U.S. Northeast.

James A. Rooney, president of Alberta Northeast, cited several innovative features in the purchase contracts, which he said are designed to ensure competitive prices throughout their 15 year term. For example, the agreements contain no take or pay requirements and provide for price adjustments based on the cost of alternative fuels in the markets to be served by the Alberta Northeast gas.

The agreements also contain provisions that allow Alberta Northeast to offer volumes not taken by one of its members to another member of the group.

Alberta Northeast figures its gas will displace 20 million bbl/year of imported oil.

NGC, PAN-ALBERTA

Target buyers for gas to be sold by the NGC/Pan-Alberta venture are power generation, industrial, municipal, and large commercial customers of Southern California Gas Co. and Pacific Gas & Electric Co. that elect to directly purchase and transport their own gas supplies under noncore procurement rules adopted by the California Public Utility Commission.

NGC said the joint venture will provide California noncore gas customers a greater supply diversity and reliability. It also will allow such customers to deal with a single supplier.

NGC had gas sales of more than 2.3 bcfd last year.

Pan-Alberta is among the largest exporters of Canadian gas to the U.S. Midwest and East with transportation and sales arrangements of 800 MMcfd through the Foothills and Northern Border pipeline systems.

Pan-Alberta also supplies 240 MMcfd to the California core market through a sales arrangement with Pacific Interstate Transmission Co. Inc., which in turn sells the Pan-Alberta volumes to SoCal Gas.

AMOCO-SHELL

Amoco will begin selling gas to Shell with the early 1992 completion of Kern River Gas Transmission Co.'s Wyoming-California system, currently under construction.

When combined with an earlier sales contract with Shell and an agreement with the Kern River system, Amoco has committed 125 MMcfd of Rocky Mountain gas to the Kern River.

Amoco will deliver the gas to Kern River's inlet at Opal, Wyo. Shell will transport through Kern River to its enhanced oil recovery operations near Bakersfield in Kern County, Calif.

Upon completion of the conditionally certificated Altamont Gas Transmission Co. pipeline project, Amoco will have the flexibility to use Canadian gas to help fulfill its sales obligation to Shell. Altamont is a proposed 30 in. line scheduled to run from Wild Horse, Mont., on the Canadian border to Opal for a connection with Kern River.