TransCanada has launched an open season on its Canadian Mainline with fixed pricing for shipping Western Canadian Sedimentary Basin (WCSB) gas to key markets.
The revised long-term proposal is meant to boost the competitiveness of WCSB supply versus rising US northeast production from the Marcellus and Utica fields.
TransCanada is seeking binding commitments for a total 1.4 Bcf/d (40mn m³/d) capacity under 10-year, fixed-price agreements at a rate of 61¢/mmBtu (C$0.77/GJ).
The proposed rate is significantly lower than competing US projects such as Nexus and Rover that have a 70¢-$1.00/mmBtu tariff.
But for the proposed toll to advance "it is important that these threshold conditions are met," TransCanada's senior vice president Stephen Clark said.
The capacity will be available beginning on 1 November from the Empress receipt point in Alberta, Canada, to the mammoth 160-Bcf Dawn storage hub in southwestern Ontario.
The Dawn hub serves utilities, distributors and other major pipelines in eastern Canada as well as major US markets.
TransCanada in November cancelled its previous proposal when it offered the same capacity on the Mainline with tolls ranging from 60-65¢/mmBtu, depending on committed volume, because of lack of interest.
The time line for the new proposed capacity will be in line with the target in service date for Energy Transfer's Rover pipeline.
The 3.25 Bcf/d Rover pipeline would transport Marcellus and Utica shale gas in Ohio, West Virginia, Michigan, and into the Dawn Hub.
DTE Energy's 1.5 Bcf/d Nexus pipeline also has an end-2017 target in-service date, that will serve the same markets, is pending regulatory approval.
The Mainline toll proposal should provide WCSB producers with lower cost access to markets served by the Dawn hub and help them address changing market dynamics, according to TransCanada.
Eastern Canada and the US northeast were once major markets for gas produced in Western Canada.
But growing gas production from the Marcellus and Utica shales has displaced Canadian imports.
The Marcellus in Pennsylvania and West Virginia is the largest US gas field by volume, while the Utica, which underlies parts of the Marcellus, is the fastest growing US shale field.
Gross gas output from the Marcellus shale averaged 18.1 Bcf/d in 2016, up from 4.8 Bcf/d five years ago, according to the US Energy Information Administration (EIA).
Gross output from Utica last year averaged at 3.9 Bcf/d, up from just 159mn cf/d in 2011, according to EIA data.
