Alberta Energy loses gas decision
National Energy Board approves new LNG terminal to be built in Quebec
Gordon Jaremko
Vancouver Sun,
21-Aug-2007
EDMONTON -- Alberta Energy has lost a quiet but hard-fought national duel with importers and consumers over the future of the province's top money-earner: natural gas.
In a July ruling described as "a signal to the global market," the National Energy Board rolled out the welcome mat to tanker cargoes of liquefied natural gas from overseas by approving a controversial cost-sharing scheme for a new LNG terminal to be built in Quebec.
On the heels of the decision, Andrew Pelletier, spokesman for Cacouna Energy -- a major player in the terminal project -- said, "Right now it's a green light. We're working towards a project announcement."
The company's statement -- expected by the end of the year -- will set out a final cost estimate and construction schedule for the Quebec import terminal that is to be developed by the Cacouna partnership of Trans-Canada Corp. and Petro-Canada.
The NEB's technical but far-reaching landmark ruling decided a fight over who will pay for a cornerstone of the project -- and possibly more like it -- over the next 20 years.
The contested item is a $738-million set of additions to Trans-Canada's national gas pipeline, including a 240-kilometre extension and other adjustments needed for markets to use the new tanker terminal at Gros Cacouna, on the south shore of the St. Lawrence River east of Quebec City.
Over vigorous resistance by Alberta Energy lawyer Brent Prenevost, the NEB sided with the Cacouna partners and their supporters, which include the Quebec government, Canadian Industrial Gas Users Association and Montreal distributor Gaz Metropolitain Inc.
The board ruled that the remote terminal is a "receipt point" for gas to enter TransCanada's pipeline, akin to conventional Alberta and Saskatchewan inlets along the main shipping route for gas to central Canada and the United States.
That status qualifies the Cacouna pipeline extension for a utility cost-sharing system known as the "rolled-in toll methodology." The $738-million bill for the LNG import terminal will become, in effect, an added mortgage to be paid off with tolls charged to all shippers, including Alberta gas producers and merchants.
TransCanada estimated the extra bill will be as little as two-tenths of a penny and no more than three cents a gigajoule by the time it is spread out over many years and all the traffic on the national pipeline system.
Alberta Energy argued the scheme creates a big subsidy for LNG imports by saving the terminal the expense of paying for its own pipeline link to Quebec, Ontario and U.S. markets.
In a strongly worded final argument before the NEB, Alberta Energy lawyer Prenevost predicted the rolled-in system will give LNG imports a competitive advantage of $1.10 per gigajoule against Alberta gas in Quebec.
He acknowledged the Alberta government was alone in resisting the scheme, but suggested it was no accident the gas production industry stayed conspicuously silent.
Posted by Arthur Caldicott on 21 Aug 2007