Copyright of the Daily Oil Bulletin 2018
Development Of North Montney Restricted By Limited Egress: Progress
Development of the North Montney play is currently restricted by limited egress to the larger and more liquid markets served by NGTL and Alliance, said Progress Energy Canada Ltd., and captive to the less liquid markets served by Westcoast.
“Further access to the NIT market hub is required for Progress to develop the North Montney resource beyond current levels. Without this access, it is unlikely that the North Montney resource will be effectively developed,” the company stated in written opening arguments to the National Energy Board (NEB).
NOVA Gas Transmission Ltd. is requesting changes to the North Montney Mainline certificate to allow the gas to flow east, and to proceed with certain components of the project independently of any final investment decision related to liquefied natural gas exports from the west coast of British Columbia. The changes would also include construction of eight additional meter stations, as well as make minor modifications to project plans.
The public hearing to consider this started this week.
In its opening statement filed with the NEB, Progress said it is the anchor shipper on the proposed North Montney Mainline. Progress intervened in this hearing to support NGTL’s application respecting the variance facilities, a roll-in of the costs of the variance facilities, and calculating tolls consistent with NGTL’s existing tolling methodology.
Progress’s support for the variance facilities is based on the need to connect its North Montney natural gas resources to the NGTL system for delivery to the NOVA Inventory Transfer (NIT) market hub and other markets downstream of the NGTL system, to support further development of its resource.
NGTL’s NIT market is the largest and most liquid in Canada, it said. It also offers egress to major gas transportation systems and markets in Canada and the United States. This ensures that producers receive the best prices for their supply, and commercial optionality associated with connectivity to multiple downstream markets, on a consistent basis.
Westcoast Energy Inc. seeks to challenge the competiveness of the variance facilities by asking the board to require NGTL to charge stacked tolls for transportation service on the variance facilities to access the existing NGTL system, Progress said.
“This would require the variance facilities shippers to pay substantially more in tolls than we would otherwise pay under NGTL’s existing tolling methodology, as approved by the board in accordance with its mandate that requires just and reasonable tolls.”
Westcoast’s proposal is inconsistent with the requirement for just and reasonable tolls and would risk limiting development of this world class resource for the benefit of British Columbians and Canadians, Progress argued.