Calgary-based TransCanada Corp. has launched an open season for binding commitments on a new pipeline tolling structure. The proposal is for a long-term, fixed-price arrangement to flow natural gas along the Canadian Mainline from the Empress receipt point in Alberta to the Dawn hub in Southern Ontario.
The proposal announced Oct. 13 is intended to allow Western Canadian Sedimentary Basin (WCSB) producers to use existing capacity on the mainline to transport natural gas from the Nova Inventory Transfer (NIT) market hub and access the eastern market trading hub at Dawn. The tolling arrangement will provide lower cost access to the high-value markets served by the Dawn trading hub. This proposal does not impact current contracts that are already in place on the Canadian Mainline system.
“TransCanada’s Canadian Mainline has been a critical piece of energy infrastructure for more than 65 years, and has connected the country’s most prolific supply basins with North America’s highest value markets,” said Stephen Clark, TransCanada’s senior vice president and general manager, Canadian Natural Gas Pipelines. “Our proposal provides competitive transportation tolls for Canadians, utilizes existing pipeline infrastructure and allows WCSB producers to retain and enhance their natural gas market share in eastern Canada and the northeast United States.”
The contract term for this service is 10 years with tolls ranging from $0.75 to $0.82 per gigajoule depending on the shippers’ contract volume commitments and a total subscription of 1.5 petajoule — or 1.5 million gigajoules — per day. These tolls are inclusive of the abandonment surcharge and delivery pressure charge. Early termination rights are provided and can be exercised following the initial five years of service upon payment of an increased toll for the final two years of the contract.
The service is priced lower than the current firm service tolls and does not include flexibility provisions such as diversions and alternate receipt points. However, secondary deliveries along the Great Lakes Pipeline to Deward, Farwell, Chippewa, Rattle Run and Belle River Mills may be permitted subject to certain conditions.
“We have listened to our customers’ needs and are pleased to present them with a competitive toll structure that provides the flexibility they need to compete with changing market dynamics while helping North Americans heat homes, fuel industries and generate reliable sources of power,” Clark said.
Details of the Dawn Long Term Fixed Price open season can be found here.
The targeted in-service date is Nov. 1, 2017.
Provision of the service is conditional on, amongst other things, TransCanada receiving National Energy Board approval on terms and conditions satisfactory to TransCanada. TransCanada intends to file an application for approval as quickly as possible following a successful open season.
Interested parties may submit binding bids for transportation capacity during the open season that will close on Nov. 10.