Energy East faces some Ontario opposition

Energy East faces some Ontario opposition

By: Richard Gilbert
Nov 11, 2014

An Ontario company is opposed to TransCanada’s plan to convert a natural gas pipeline to oil between North Bay and Ottawa and replace it with a new smaller pipeline, as part of a proposal to construct the Energy East Pipeline.

"We have expressed concerns about the structure of the Energy East project for well over a year and we continue to have serious concerns about the negative impacts to our customers of a new higher-cost line with lower capacity, and the resulting impact of increased natural gas supply costs," said Steve Baker, Union Gas Limited president in a press release.

"While we support the concept of the Energy East project, we cannot support removing an existing, fully-used natural gas pipeline and replacing it with a new, smaller and more expensive pipeline."

TransCanada Corporation filed a project application with the National Energy Board of Canada (NEB) on Oct. 30 for the construction of the $12 billion Energy East Pipeline Project.

As part of this proposal, TransCanada filed an application to build the Eastern Mainline Pipeline Project in southern Ontario.

The proposed $1.5-billion project will provide 250 kilometres of natural gas pipeline in the Toronto-to-Montréal corridor. It will have the capacity to supply 600 million cubic feet per day supplied by natural gas from the northeastern U.S.

Union Gas Limited, a major natural gas storage, transmission and distribution company, supports the conversion of under-used natural gas pipeline capacity between Alberta and North Bay.

However, the company opposes TransCanada's proposal to convert a natural gas pipeline to oil between North Bay and Ottawa and replace it with a smaller gas pipeline. The project will reduce capacity by 20 per cent.

In response, TransCanada argues that converting this gas pipeline to crude oil makes sense, because the capacity is no longer needed.

"We used to have a lot of pipeline capacity that was going through Ontario and then into the United States," said Gary Houston, TransCanada's vice-president, Ontario and Prairies, Energy East Pipeline.

"All of these export points are turning into import points. So, the infrastructure we built across Canada, and into Ontario and Quebec is now underutilized. And, some of the gas you are using in Ontario and Quebec is coming from the United States."

Houston made this statement on Oct. 17 in anticipation of the NEB submission. He was addressing delegates at the 57th annual convention of the Provincial Building and Construction Trades Council of Ontario, which was held in Niagara Falls at the Hilton Hotel.

"The gas industry has changed a lot in the last five to 10 years," he said. "The biggest change is shale gas. Some of the biggest shale gas deposits in North America are just to the south of us here in Ontario, in the Northeast United States."

As a result of this change in the industry, Houston said that there will be excess supply in Ontario even after this new smaller pipeline is built.

According to Union Gas, TransCanada has underestimated market demand and understated the size and cost of the new replacement gas line.

Baker argues that TransCanada's plan will negatively impact 3.6 million natural gas customers, including schools, hospitals, homes and industries. He said Union Gas will support the Energy East if TransCanada leaves the existing gas pipeline in place and builds a new oil pipeline from North Bay to Ottawa.

Houston said TransCanada's current Energy East Pipeline proposal will ensure that all contracted gas transmission customers will continue to receive gas.

The project involves the conversion of about 3,000 kilometres of natural gas pipeline capacity to crude oil on TransCanada's existing Canadian Mainline from Burstall, Saskatchewan to Cornwall, Ontario. It includes the construction of about 1,400 kilometres of new pipeline in Alberta, Saskatchewan, Manitoba, Quebec and New Brunswick.

TransCanada plans to start pipeline construction in 2016 and want to go into operation by the end of 2018.