Canadian Regulator Approves NGTL Service Change [UPDATE]
The Canada Energy Regulator (CER, formerly the National Energy Board) on September 26 approved a plan by TC Energy’s Nova Gas Transmission Limited (NGTL) designed to get natural gas into storage during summer maintenance periods on the NGTL system.
The ruling was released in a letter decision, with reasons to follow. NGTL had asked for an expedited decision from the CER, which held an oral hearing into the application in Calgary on September 25.
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The temporary service protocol (TSP) will take effect September 30 and will be available to shippers during maintenance periods on the NGTL system for the rest of this summer (which ends October 31) and between April 1, 2020 and October 31, 2020. Most producers strongly supported the plan, but a few major gas buyers said it would unfairly raise gas prices in Alberta to the benefit of a small number of producers.
“This is great news for Alberta gas producers and for Alberta royalty owners, which are all Alberta’s residents – and it’s been a long time coming,” Darren Gee, CEO of pure-play gas producer Peyto Exploration & Development, told NGW. “We’ve been arguing for this for the last two years.”
With the TSP now available, Gee said, the differential between Alberta gas prices and benchmark North American prices – and the futures curves between them – should begin to narrow, for at least the next 12 months, or longer, if NGTL stays on its expansion schedule.
“If that happens, we’ll be ‘connected’ again to North American markets,” he said. “This winter was already looking pretty good with storage at dangerously low levels, but now next summer should be strong as well with full access to storage.”
Since 2017, NGTL has only allowed shippers with firm service on its system to access storage. The inability for most producers to get gas into storage, especially during the summer months, caused wild gyrations at Aeco, the main pricing hub in southern Alberta, at times forcing the spot price into negative territory.
“The Canada Energy Regulator’s approval is a significant milestone for our natural gas sector,” Dale Nally, Alberta’s associate minister of natural gas, said in a September 27 statement. “By bringing industry to the table, our government encouraged companies to put their differences aside to protect our natural gas producers and save Alberta jobs.”