Relevant • Independent • Objecve maximum day receipts of 13.17 Bcf. 4 Thus far in 2016, NGTL's average transported volume is approximately 11.3 billion cubic feet per day (Bcfpd). 5 The vast network of pipelines is typically divided into three project areas: Peace River, North & East, and Mainline. This is illustrated in Figure 1. Figure 1: NGTL System Map Source: NEB 6 Figure 1 also shows NGTL’s Eastern Gate, an important delivery point. This is where the NGTL System interconnects with the Canadian Mainline at Empress Border and Foothills Saskatchewan System at McNeill Border, both located at the Alberta-Saskatchewan border. The Foothills Saskatchewan System crosses into the US near Monchy, Saskatchewan. Major border points include the Alberta-BC border and Gordondale Border/ Boundary Lake. Natural gas connects to the Foothills BC October 2016 CERI Commodity Report — Natural Gas The Approved NGTL Pipeline Expansion Paul Kralovic The NOVA Gas Transmission Limited (NGTL) System – a wholly-owned subsidiary of TransCanada Pipelines (TCPL) – currently consists of more than 25,000 kilometers of natural gas pipelines in Alberta and northeastern Brish Columbia, making it one of the larger pipeline systems in North America. And with Government of Canada approval granted on October 31, 2016, it appears that the NGTL System will connue to expand. With over 1,100 receipt points and over 300 major delivery points, the NGTL System gathers approximately 66 percent of natural gas produced in western Canada, mostly from the rapidly-growing Montney and Duvernay Shale plays but also ght convenonal supply from the Deep Basin of Alberta. 1 The extensive network of pipelines gathers natural gas and delivers it for use in Alberta, as well as connects to the Canadian Mainline, Foothills System and the other third-party natural gas pipelines. It is important to note that both the Canadian Mainline and the Foothills System are also wholly-owned by TCPL. As of end-2015, approximately 3,885 billion cubic feet (Bcf) was delivered on the NGTL System. 2 Of that, 1,527 Bcf (or 39 percent) was delivered within Alberta and BC; 922 Bcf (or 24 percent) was delivered to systems supplying eastern Canada and the US Northeast; 724 Bcf (or 19 percent) was delivered to systems supplying US Midwest markets; and 694 Bcf (or 18 percent) was delivered to systems supplying Pacific Northwest and California markets. 3 Average day deliveries on the NGTL System to December 31, 2015 were 10.64 Bcf, with CERI Commodity Report – Natural Gas Editorial Commiee: Paul Kralovic, Dinara Millington, Megan Murphy, Allan Fogwill About CERI The Canadian Energy Research Instute is an independent, not-for-profit research establishment created through a partnership of industry, academia, and government in 1975. Our mission is to provide relevant, independent, objecve economic research in energy and related environmental issues. For more informaon about CERI, please visit our website at www.ceri.ca or contact us at [email protected].
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Relevant • Independent • Objective
maximum day receipts of 13.17 Bcf.4 Thus far in 2016, NGTL's average transported volume is approximately 11.3 billion cubic feet per day (Bcfpd).5 The vast network of pipelines is typically divided into three project areas: Peace River, North & East, and Mainline. This is illustrated in Figure 1. Figure 1: NGTL System Map
Source: NEB6
Figure 1 also shows NGTL’s Eastern Gate, an important delivery point. This is where the NGTL System interconnects with the Canadian Mainline at Empress Border and Foothills Saskatchewan System at McNeill Border, both located at the Alberta-Saskatchewan border. The Foothills Saskatchewan System crosses into the US near Monchy, Saskatchewan. Major border points include the Alberta-BC border and Gordondale Border/Boundary Lake. Natural gas connects to the Foothills BC
October 2016
CERI Commodity Report — Natural Gas
The Approved NGTL Pipeline Expansion Paul Kralovic The NOVA Gas Transmission Limited (NGTL) System – a wholly-owned subsidiary of TransCanada Pipelines (TCPL) – currently consists of more than 25,000 kilometers of natural gas pipelines in Alberta and northeastern British Columbia, making it one of the larger pipeline systems in North America. And with Government of Canada approval granted on October 31, 2016, it appears that the NGTL System will continue to expand. With over 1,100 receipt points and over 300 major delivery points, the NGTL System gathers approximately 66 percent of natural gas produced in western Canada, mostly from the rapidly-growing Montney and Duvernay Shale plays but also tight conventional supply from the Deep Basin of Alberta.1 The extensive network of pipelines gathers natural gas and delivers it for use in Alberta, as well as connects to the Canadian Mainline, Foothills System and the other third-party natural gas pipelines. It is important to note that both the Canadian Mainline and the Foothills System are also wholly-owned by TCPL. As of end-2015, approximately 3,885 billion cubic feet (Bcf) was delivered on the NGTL System.2 Of that, 1,527 Bcf (or 39 percent) was delivered within Alberta and BC; 922 Bcf (or 24 percent) was delivered to systems supplying eastern Canada and the US Northeast; 724 Bcf (or 19 percent) was delivered to systems supplying US Midwest markets; and 694 Bcf (or 18 percent) was delivered to systems supplying Pacific Northwest and California markets.3 Average day deliveries on the NGTL System to December 31, 2015 were 10.64 Bcf, with
CERI Commodity Report – Natural Gas Editorial Committee: Paul Kralovic, Dinara Millington, Megan Murphy, Allan Fogwill About CERI The Canadian Energy Research Institute is an independent, not-for-profit research establishment created through a partnership of industry, academia, and government in 1975. Our mission is to provide relevant, independent, objective economic research in energy and related environmental issues. For more information about CERI, please visit our website at www.ceri.ca or contact us at [email protected].
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System at the Alberta-BC border in the southwest corner of Alberta, in the Crowsnest area. Natural gas is exported into the US through Kingsgate, BC/Eastport, and Idaho. Gordondale Border/Boundary Lake is also located along the Alberta-BC border, but in the Peace River project area. It is important to note that natural gas volumes in this area are increasing due to increased supply from the Horn River and Montney supply areas in northwestern BC and northwestern Alberta. Other borders include Groundbirch East, Alberta-Montana, Alliance Clairmont, Alliance Edson, Alliance Shell, Cold Lake and Unity. In 2015, 1,020 Bcf of natural gas was delivered to the 14,114 kilometer Canadian Mainline, transporting gas from the Alberta-Saskatchewan border to the Ontario-US border.7 Nearly 700 Bcf of natural gas was delivered to the Foothills BC System while 570 Bcf was delivered to the Foothills Saskatchewan System. The Foothills System transports gas from central Alberta to the US border, serving several markets including the US Midwest, Pacific Northwest, California and Nevada; it is 1,241 kilometers in length.8 Figure 2 illustrates NGTL System deliveries at Empress, McNeill and Alberta-BC border points. System deliveries at Empress in 2016 (January-September) averaged 2.68 Bcfpd, down from 2.81 Bcfpd in 2015. System deliveries at McNeill Border in 2016 (January-September) averaged 1.80 Bcfpd, up from 1.56 Bcfpd in 2015. System deliveries at Alberta-BC in 2016 (January-September) averaged 2.06 Bcfpd, up from 1.89 Bcfpd in 2015. It is interesting to note that system deliveries at Empress averaged 5.29 Bcfpd in 2006 while deliveries at McNeill averaged 1.93 Bcfpd and deliveries at Alberta-BC averaged 1.95 Bcfpd over the same time period. Figure 2: NGTL System Deliveries (Bcfpd)
Source: TCPL9 and CERI
While the average throughput through the Eastern Gate is currently below capacity, the average throughput in 2015 is close to capacity in the Peace River project area. Upstream James River capacity, for example, is 8 Bcfpd and average throughput in 2015 was 7.8 Bcfpd.10 To improve access of western Canadian natural gas to US markets, as well as providing additional capacity to the oil sands area in the North & East project area, NGTL applied to the NEB on March 31, 2015 to build and operate the 2017 NGTL System Expansion Project. In June 2016, the NEB recommended that the Government of Canada approve the expansion project.11 As previously mentioned, the Government of Canada approved the NGTL System Expansion Project on October 31, 2016. The C$1.3 billion project is subject to 36 conditions, including emergency response, waterways and engaging Indigenous communities.12 The expansion project addresses various flow constraints in the NGTL System. The project includes five pipeline loops and two compressor station unit additions, including the Grande Prairie Mainline Loop 2 (McLeod River Section), Northwest Mainline Loop 2 (Bear Canyon Section), Liege Lateral Loop 2 (Pelican Lake Section), Kettle River Loop (Christina River Section) and the Northwest Mainline Loop (Boundary Lake Section), while the compressor stations are located at Otter Lake and Alces River.13 The five pipeline expansions vary between 20 and 91 kilometers, accounting for a total length of 230 kilometers.14 Figure 3 illustrates the NGTL System Expansion Project, including proposed aforementioned pipeline section loops in red as well as proposed compressor station unit additions shown in a yellow box. The existing NGTL System is shown in green. The figure also shows areas highlighted by the constrained flow paths including Northwest Mainline Loop, North Central Corridor, Grande Prairie Mainline Loop, the Marten Hills Lateral and the North Lateral. The five proposed pipeline loops are designed to alleviate flow constraints of natural gas to the Oils Sands Delivery Area (OSDA) or to increase flow in the Mainline Project Area, increasing flow from the northwest portion of the NGTL System to the southeast part of the province, towards major export delivery points, such as Empress, McNeill and the Alberta-BC border.
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Figure 3: 2017 NGTL System Expansion Project
Source: NRCAN15
The expansion project is an important part of TransCanada's C$48 billion capital growth plan that includes C$23 billion of new natural gas pipelines.16 But it is not the only NGTL project reviewed by the NEB. The NEB is also reviewing two other NGTL applications. The first is the proposed Towerbirch Expansion Project. Received on September 2, 2015, the NEB issued a report on October 6, 2016, suggesting that the Government of Canada approve the Towerbirch Expansion Project, subject to conditions.17 The 88-kilometer proposed pipeline is illustrated in Figure 4. Comprised of two sections, the Tower Lake Section (purple line) and the Ground Birch Mainline Loop (red line), the proposed pipeline would connect to the Gordondale Meter Station and the existing NGTL System.
Figure 4: NGTL’s Towerbirch Expansion Project
Source: NEB18
The second filing is NGTL’s application to purchase and operate the Albersun Pipeline. Located in the Fort McMurray area, the 179 kilometer pipeline is currently owned by Suncor Energy Logistics Corporation. The purchase would include the Albersun Pipeline (141 kilometers), the Mildred Lake Lateral pipeline (5.8 kilometers), the Gregoire Lateral (23.4 kilometers) and the Mildred Lake East Sales Meter Station.19 The acquisition requires approval from the NEB as well as the Alberta Energy Regulator (AER).20 NGTL filed its application with the NEB on April 27, 2016.21 The NGTL System is one of the larger pipeline systems in North America and it may get larger yet. While providing additional capacity to the OSDA is certainly positive for western Canadian producers, there seems to be more concern regarding markets in central Canada. In an effort to better access markets in central Canada and compete with low-cost natural gas from the Marcellus and Utica, TCPL released an open season proposing a new toll structure in mid-October for western Canadian producers to ship gas eastward on its Mainline, transporting natural gas from Empress, Alberta to Dawn, Ontario.22 The Calgary-based company, however, announced in mid-November that it is shelving its offer to reduce its pipeline tolls, citing a lack of volumes to make the plan viable.23
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Endnotes 1TransCanada Pipeline website, NGTL System Jurisdiction, http://www.transcanada.com/3927.html 2TransCanada Pipeline website, System Maps, NGTL System Segment Codes & Project Areas, September 2016, http://www.transcanada.com/customerexpress/855.html 3ibid 4ibid 5Journal of Commerce website, $1.3 billion NOVA Gas project approved by feds, November 3, 2016, http://journalofcommerce.com/Resource/News/2016/11/13-billion-NOVA-Gas-project-approved-by-feds-1019635W/ 6National Energy Board website, Canadian Pipeline Transportation System - Energy Market Assessment, April 2014, https://www.neb-one.gc.ca/nrg/ntgrtd/trnsprttn/2014/index-eng.html#fga24 7TransCanada Pipeline website, Natural Gas Pipelines, http://www.transcanada.com/natural-gas-pipelines.html 8ibid 9TransCanada Pipelines website, Gas Day Summary, http://www.transcanada.com/customerexpress/gasdaysummaryreport.html 10National Energy Board website, Canada’s Pipeline Transportation System 2016, https://www.neb-one.gc.ca/nrg/ntgrtd/trnsprttn/2016/cnds-ppln-trnsprttn-systm-eng.html 11National Energy Board website, 2017 NGTL System Expansion Project, June1, 2016, http://www.neb-one.gc.ca/pplctnflng/mjrpp/2017nvgsxpnsn/index-eng.html 12Daily Oil Bulletin website, NGTL $1.3 billion system expansion obtains federal cabinet approval, October 31, 2016, http://www.dailyoilbulletin.com/article/2016/10/31/ngtl-13-billion-system-expansion-obtains-federal-c
13TransCanada Pipeline, 2017 BGTL System Expansion Project, http://www.transcanada.com/ngtl-2017.html 14Natural Resources Canada, 2017 NOVA Gas Transmission Ltd. System Expansion Project, http://www.nrcan.gc.ca/questionnaire/18647 15Natural Resources Canada, 2017 NGTL System Expansion Project Map, http://www.nrcan.gc.ca/sites/mpmo.gc.ca/files/2017-NGTL-SE-Project-Map_en.png 16TransCanada Pipeline website, 2017 NGTL System Expansion Project, http://www.transcanada.com/ngtl-2017.html 17National Energy Board website, NOVA Gas Transmission Ltd. - Towerbirch Expansion Project, http://www.neb-one.gc.ca/pplctnflng/mjrpp/twrbrch/index-eng.html 18ibid 19National Energy Board website, NOVA Gas Transmission Ltd. – Albersun Pipeline Asset Purchase, https://www.neb-one.gc.ca/pplctnflng/mjrpp/lbrsnppln/index-eng.html 20TransCanada Pipeline website, Albersun Pipeline, http://www.transcanada.com/albersun.html 21ibid 22The Globe and Mail website, TransCanada offers Alberta gas shippers lower price along Canadian Mainline, October 13, 2016, http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/transcanada-offers-alberta-gas-shippers-lower-price-along-canadian-mainline/article32347443/ 23http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/transcanada-halts-open-season-for-tolls-on-canada-gas-pipeline/article32847866/