RE:The Game Changer for Canadian nat gas / Johannson /LNG "...We can put a tariff together and I think we can make it competitive,” Karl Johannson, executive vice-president and president, Canada and Mexico natural gas pipelines and energy, told the company’s investor day this morning.
He noted that some gas from Western Canada has already moved to the LNG export market on the Gulf Coast, although not on the TransCanada system. “But I think we can compete with any other system out there so if our producers want to do that, we can provide that for them.”
While the company is still hopeful that Montney producers will be able to benefit from an LNG market off the West Coast, if they can’t “we can still access LNG for our customers,” said Johannson. “For that matter, we can actually move a unit of northeast B.C. gas into Mexico City once we get Sur de Texas fully built out which should be about a year from now.”
On the NOVA Gas Transmission Ltd. system, “it’s all about getting the gas out of the system into markets,” he said. By the end of this year, the company will have placed $2.3 billion in service — about 30 projects. The additional receipt capacity is already showing up on the system with new peaks in production, analysts heard. “Right now we are moving a little over 12 bcf a day [of natural gas] on NGTL and we haven’t seen those volumes on NGTL in over 10 years.”
While the oversupply in Alberta resulted in lower AECO prices in recent months, that problem is being alleviated with the arrival of winter in Alberta with higher demand, according to Johannson.
Over the last year, the company has secured an additional $2 billion in new projects on the NGTL system with three bcf/d of new gas supply and delivery requests. Of that, about 2.3 bcf/d is new receipt supply coming onto the system that will be coming in the 2019-2020 period and some in 2021.
Another 700 mmcf/d is new delivery service that will take gas off the system in market areas. That is about equally split between going down the Gas Transmission Northwest (GTN) system and to the Alberta oilsands, he said.
TransCanada also was successful with its Long Term Fixed Price (LTFP) service on the Mainline that took effect Nov. 1, 2017 as it cleared a lot of the surplus gas “which has been nagging us on the Mainline for years,” said Johannson. “What it has done is take four billion cubic feet a day out of the market and now the rest of our capacity is that much more valuable and that much sought after.”
While the price volatility which has plagued the NGTL system in recent years is likely to return in the spring, “the real trick on the system right now is to get export capacity to go find markets that aren’t in such surplus right now.”
TransCanada is going to be anchored by the 100-year reserves of the Western Canadian Sedimentary Basin and the Appalachian Basin, he noted. “It’s really up to us to make sure that we give them the connectivity to the markets to make sure those basins are allowed to produce those reserves,” said Johannson.
“This is really key for our strategy going forward to make sure that we can get our gas into market areas into our systems,” he said. “We don’t want to be an intermediate carrier.”
Regional demand for natural gas is forecast to grow significantly over the next decade and that will provide an opportunity for TransCanada to provide a seamless connection along its pipelines to growing markets in the Gulf Coast, Central and Northeast U.S., the West Coast and Mexico, analysts heard.
TransCanada is working with everything it can right now, according to Johannson. “If our producers want to take gas east, we will do another LTFP and we will bring back some capacity on the Mainline to go east,” he said. The Mainline is currently full at 3.8 bcf/d although gas is moving on and off the system.
TransCanada is working with its customers to do whatever it can do to make LNG more viable because of its importance to the WCSB, he said."