TransCanada Revives Plan to Lowball M-U Gas Using Canada Pipeline

You may recall that TransCanada, one of Canada’s leading midstream/pipeline companies, cooked up a deal last year to pipe natural gas from Canada’s West Coast to the East Coast in order to fend off cheap supplies of Marcellus/Utica gas that will flow into Canada when/if the NEXUS and Rover pipelines get built (see TransCanada Pipe Drops Price 42% to Compete with Marcellus/Utica). TransCanada dropped their pipeline price to lure drillers by (theoretically) making it less expensive to get gas from Western Canada, some 2,400 miles away, than from the Marcellus, just 400 miles away. In October TransCanada launched an open season to lock up customers for the new, lower-priced option (see TransCanada Launches Open Season to Lowball Marcellus/Utica Gas). The open season was a flop because TransCanada insists on a 10-year commitment (see TransCanada Plan to Lowball M-U Gas Using Canada Pipeline a Bust). We thought that was the end of it, but it wasn’t. The Federal Energy Regulatory Commission (FERC) approved the Rover pipeline earlier this month (see ET Rover Pipeline Gets Final Approval by FERC). That lit a fire under TransCanada because they perceive Rover as a direct, competitive, threat. So TransCanada has revived their plan to make it cheaper to pipe gas from western Canada to eastern Canada. Last time the deal was a 10-year term with a long-term tolling rate between C$0.75/GJ to C$0.82/GJ. Now the deal is a 10-year term at a simplified single rate of C$0.77/GJ. Huh? Looks almost like the same deal all over again–same 10-year term, about the same price. The difference appears to be that TransCanada has dropped a minimum amount to be shipped, hoping they can attract a bunch of small fry and create enough volume that way…

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