Energy regulators need to shift gears to allow natural gas companies to build new pipelines to take advantage of a continental shift in supply and demand, the president of Ontario’s largest gas utility said Tuesday.
Enbridge Inc. is working with Spectra Energy and DTE Energy Inc. on a pipeline project that would bring gas from Ohio’s Utica field into Ontario, but Guy Jarvis, president of Enbridge’s gas distribution subsidiary, said such projects face unnecessary hurdles because regulators are reluctant to approve long-term contracts that are needed to finance construction.
“Nobody is going to build a multibillion-dollar pipeline on spot contracts,” Mr. Jarvis said in an interview, following panel discussion on the need to expand demand for natural gas in North America.
Enbridge Gas Distribution, a unit of Enbridge Inc., serves two million customers, primarily in Ontario, and Mr. Jarvis said there is a tremendous opportunity to generate new gas demand in the residential, commercial and transportation sectors, as well as in power generation. But he said the industry needs to work with its customers, governments and regulators to ensure the needed infrastructure keeps pace with the booming supply.
And increasingly, that will likely mean western Canadian producers will focus on growing oil sands demand and facilities to export liquified natural gas from the British Columbia coast, while eastern consumers will look to the prolific shale gas fields like Pennsylvania’s Marcellus and Ohio’s Utica for competitively priced supply.
That shifting market has led TransCanada Corp. to look for higher tolls on declining volumes that it ships on its mainline from Western Canada to Ontario, Quebec and the Eastern United States. The National Energy Board rejected TransCanada’s toll request, ordering the company to freeze its tolls for five yearsand encouraging it to boost volumes on the line.
TransCanada is also proposing to reconfigure some capacity on the line – which consists of several parallel pipes – to carry crude oil from Alberta to Quebec and New Brunswick.
Mr. Jarvis said he was not prepared to comment on how the toll decision would impact Enbridge’s distribution company, except to note that its customers would benefit from lower gas prices as a result of the freeze on shipping costs.