Press release from CNW Group
Changing customer requirements create new opportunities for Alliance Pipeline
Friday, December 03, 2010
CALGARY, Dec. 3 /CNW/ - Alliance Pipeline Ltd. today made public its intent to provide new service offerings for natural gas receipts and deliveries. The timing coincides with Alliance's shipper contract renewal notifications due at close of business on December 1, 2010. The original 15-year agreements, which became effective in 2000, required shippers to give Alliance five years' notice to extend their contracts for a minimum of one year beyond 2015.
As expected, shippers representing approximately eight percent of original contracted capacity have elected to extend their existing contracts to at least December 1, 2016. These shippers also retain the option to continue extending their contract on an annual basis. Remaining shippers have elected not to extend their commitments beyond 2015. The pipeline will remain fully contracted under existing firm service contracts until December 1, 2015.
"We believe that Alliance Pipeline will continue to be fully utilized for many years to come", said Murray Birch, Alliance Pipeline president and CEO. "Alliance expects to continue to be a low cost and highly competitive transportation route to key midwest and eastern markets, earning superior netbacks for western Canadian producers. Given our pipeline's proximity to key developing shale resource plays such as the Montney in British Columbia and the Bakken in North Dakota, Alliance's capability to transport liquids-rich gas provides a significant competitive advantage".
The capacity election process clears the way for Alliance to re-market pipeline capacity made available beyond 2015. While Alliance's cost and tariff structure will continue to provide cost-effective transportation to shippers seeking point-to-point service to Chicago, Alliance expects to further enhance its competitive position and generate revenues with the introduction of new services. Over the next five years, Alliance plans to move from a single-service, single-toll export pipeline to a new multi-service business model, providing customers choice from a suite of transportation services.
Among other things, Alliance will seek to implement receipt and short-haul delivery services to complement its existing "bullet line" delivery service to Chicago and provide greater shipper market liquidity though hub services such as the Natural Gas Exchange (NGX) and the Alliance Chicago Exchange (ACE) project.
"These market dynamics, growing liquids-rich gas supply from unconventional development and customer demand for new services present an exciting new opportunity for Alliance to transition to a multi-service, multi-market business model. Combined with the continuity of Alliance's existing transportation business, we are well-positioned to provide shippers additional value and maximize pipeline revenue", Mr. Birch said.
Alliance has received positive feedback about the multi-service approach from existing and potential customers. The company will refine its plans in consultation with Canadian and U.S. natural gas shipping communities in the coming months, and seek regulatory approvals as required for the new services.
About Alliance Pipeline:
Alliance Pipeline owns and operates a 3,700-kilometre (2,311-mile) high‐pressure natural gas transmission system that delivers rich natural gas from the Western Canadian Sedimentary Basin to the Chicago market hub.
Alliance Pipeline Limited Partnership ("Alliance Canada") owns the Canadian portion of the Alliance Pipeline system. Alliance Canada is owned 50 percent each by affiliates of Enbridge Income Fund (TSX:ENF.UN) and Fort Chicago Energy Partners L.P. (TSX:FCE.UN).
Alliance Pipeline L.P. ("Alliance U.S.A.") owns the U.S. portion of the Alliance Pipeline system. Alliance U.S.A. is owned 50 percent each by affiliates of Enbridge Inc. (TSX:ENB) (NYSE:ENB) and Fort Chicago Energy Partners L.P. (TSX:FCE.UN).
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