U.S. Will Export Marcellus Natural Gas to Canada by 2020

The TransCanada Canadian Mainline is an 8,762 mile natural gas pipeline that spans Canada from the Alberta/Saskatchewan border east to the Québec/Vermont border, along the way connecting with other natural gas pipelines in Canada and the U.S. With respect to the U.S., the gas today flows one way: from Canada to the U.S. But NGI Shale Daily reports that by 2020, the gas will be flowing the other way.

Burgeoning U.S. shale gas is expected to fully reverse the current cross-border flows of natural gas in the Niagara Falls trading region of Ontario and New York State, sending U.S. gas north into Canada, according to a pipeline system restructuring blueprint provided by TransCanada Corp. to the National Energy Board (NEB).

By 2020 Marcellus Shale production from the northeastern United States will stream up into Canada at a rate of up to 400 MMcf/d, Natural Gas Intelligence’s (NGI) Shale Daily reports, based on TransCanada’s NEB filing which predicts northeastern U.S. production will grow more than eight-fold within 10 years. TransCanada generated the study to support its plan to restructure its system and tolls.

U.S. shale gas is projected to cross the border via Canada’s Niagara and Chippawa delivery points northwest of Buffalo, NY, reversing the flow at the TransCanada Mainline interconnects with the National Fuel Gas, Empire and Tennessee Gas Pipeline systems.

The Marcellus production basin in Pennsylvania, West Virginia, New York State, Ohio, New Jersey and Maryland "is expected to grow from approximately 1 Bcf/d in 2010 to over 8 Bcf/d by 2020," the forecasts say. "Within a few years Marcellus production growth is expected to result in reversed flows at the Niagara and Chippawa delivery points. Flows at these points are expected to reverse from Canadian exports of about 0.4 Bcf/d in 2010 to imports of about 0.3-0.4 Bcf/d in 2020."

Alberta producers have protested the plan as an attack on their eastern Canadian markets, but Ontario industrials are supporting the changes that will give them ability to shop around internationally for supplies. The Association of Power Producers of Ontario (APPrO) predicts the south-to-north flow "could potentially grow up to (a total) 2 Bcf/d with reversal of the Niagara pipeline and other new projects from Michigan into Dawn. This shale gas may also require the development of new transportation and storage services to facilitate the integration of the supply into the overall natural gas market."*

*NGI Shale Daily Press Release (Sep 13, 2011) – Tide Turns at Niagara from U.S. Imports to Marcellus Shale Exports, NGI Reports