U.S. Shale Gas to Travel North Via TransCanada's Bidirectional Iroquois Pipeline
"A new eastern path will open for Canadian imports of shale gas from the United States -- potentially straight to the national capital, Ottawa -- as a result of a pipeline direction switch approved by the National Energy Board (NEB).
The ruling authorizes TransCanada Corp. to convert the Iroquois Pipeline border crossing between eastern Ontario and New York from a one-way Canadian export path into a bidirectional trade service.
The approved package also includes meter facilities to enable growth of deliveries by the TransCanada network into the Ottawa region in Enbridge Gas Distribution's franchise territory covering Toronto and eastern Ontario.
The Iroquois line has potential to become the third northbound path for U.S. shale gas into Canada, adding to flows across southwestern Ontario via Union Gas's Dawn storage and trading hub and TransCanada's Niagara Falls border crossings.
TransCanada told the NEB that three distribution companies and a marketer subscribe to capacity on the reversible Iroquois link. "The Iroquois Project will increase the diversity and flexibility of transportation routes available to shippers,” said Enbridge Gas.Enbridge Gas and Union, Canada’s biggest distribution companies, evolved into active cross-border traders as U.S. shale production and exports grew, using permits granted by the NEB and the U.S. Department of Energy (DOE).
Trade scorecards recorded by the DOE’s Office of Fossil Energy credit the two Ontario distributors with 131.8 Bcf of U.S. gas exports during 2016. The scale and pace of added Lower 48 exports along the new Iroquois path remain unknown, depending on unpredictable developments in the United States, as well as Canadian market conditions.
Until recently TransCanada forecasts called for 400 MMcf/d of new U.S. exports via the modified Iroquois border crossing as early as 2018. However, predictions were suspended after New York officials foiled a trading strategy called SoNo, short for south-to-north, by denying environmental approval to a shale gas supply project, Constitution Pipeline.
The plan's fate remains tied up in court.
Questions about the Iroquois trading path's potential were also raised in the last natural gas market review conducted by the Ontario Energy Board (OEB)."By 2021, U.S. supplies -- primarily from the Marcellus and Utica basins -- will meet some 74% of Ontario demand," said an OEB staff report. "Increased access to northeast U.S. shale gas via enhanced pipeline infrastructure will raise the share of total Ontario gas demand met from shale gas originating in the U.S. northeast from 0.4 Bcf/d to 2.0 Bcf/d between 2015 and 2021.
"Union raised doubts that the key ingredient of SoNo, a Constitution Pipeline gas supply link to Iroquois at Waddington in central New York State, would ever mature into a rival for the Dawn complex near the western Ontario border with Michigan.
"Even if SoNo proceeds, Waddington is likely to become only a seasonal supply point, with potential flows into Ontario only during the summer and shoulder months," said Union. "Pipeline flows from Ontario into New York through Waddington are expected to continue during winter months, even if Waddington becomes a supply point for Ontario during summer months.
"Uncertainties raised by the Iroquois gas flow flexibility case included a lesson in the power of aboriginal and environmental resistance to delay even modest, routine pipeline construction.The Iroquois bidirectional conversion plus the two Ottawa service improvements only cost C$18 million ($14.4 million). All the property affected by construction belongs to TransCanada except for a government parking lot the project will use briefly. But aboriginal intervention stretched the standard-form application into a complex case lasting 10 months. The approval took until three weeks after TransCanada's original Nov. 1, 2017 target for putting the pipeline service improvements into service.
The project ran into a 14,062-square-mile land claim by the Algonquins of Ontario that includes Ottawa and its home of Canada’s federal government, Parliament Hill. The NEB and TransCanada had to hear out and respond to demands, unsuccessful but vigorous, for expensive concessions ranging from fresh historical resources surveys to special native oversight of eastern Ontario pipeline facilities paid for by the company."