ALBERTA PRODUCERS ACCEPT GAS SALES CONTRACT

Alberta producers have accepted a new 1 year sales contract with Alberta & Southern Gas Ltd. covering about 1 bcfd of gas exports to California.

The contract, effective Aug. 1, sets up a two tier price system.

The Tier 1 price will remain unchanged at $1.90/MMBTU, while the Tier 2 price will be $1.60/MMBTU. The Tier 1 price will apply to all winter volumes-December through February-and to the first 700 MMcfd of sales during the rest of the year. The Tier 2 price will apply only to the next 200 MMcfd of sales in March and November and to 350 MMcfd in April-October.

Any further volumes would again receive the Tier 1 price.

Annual average price is expected to drop to $1.84 from $1.90. Alberta producers will earn about $25 million less on sales of about $800 million/year.

A number of large operators in the 190 member producer pool voted to reject an earlier offer averaging $1.80/Mcf from A&S, a unit of Pacific Gas & Electric, San Francisco.

All values are expressed in U.S. dollars.

IROQUOIS REACTION

Meantime, gas industry executives in western Canada expressed disappointment about a Federal Energy Regulatory Commission decision to further review the proposed Iroquois Gas Transmission System (OGJ, July 30, p. 34).

A proposal by TransCanada PipeLines Ltd., Calgary, would link up with Iroquois at Iroquois, Ont., to export 575.9 MMcfd of Alberta natural gas to New England markets.

Peter Fournier, manager of regulatory affairs for the Canadian Petroleum Association, said FERC's decision was unexpected. Alberta producers had expected an approval.

TransCanada officials said the decision will not change their $2.6 billion expansion project, currently awaiting approval by Canada's National Energy Board. A spokesman said the company still aims to ship gas through an expanded system by late 1991 regardless of what happens in the U.S. Additional volumes could be sold in Ontario and Quebec.

Rick Hillary, natural gas manager for the Independent Petroleum Association of Canada, said the real losers will be consumers in the U.S. Northeast if FERC ultimately rejects the Iroquois project. He said it would set the stage for gas shortages in the U.S.

EXPANSION OPPOSED

Canadian industrial gas users continue to oppose the TransCanada expansion project. NEB is attempting to resolve a dispute on the toll system to be used to pay for the expansion.

The Industrial Gas Users Association filed an affidavit in federal court in Ottawa alleging NEB is "narrowly interpreting" an order issued by the court last February instructing the NEB to review its toll system.

System expansion costs are now shared among all pipeline customers. The association says companies that will benefit most from the expansion should pay most of the costs. It says the existing toll system will cost Canadian consumers $150 million in higher shipping costs.