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TC PipeLines affiliate working on expansion to help New England gas supply

Portland Natural Gas Transmission System LP is finalizing shippers for an expansion project at a time when pipeline-constrained New England is eager for additional gas supply options, an executive said June 6.

TC PipeLines LP-operated PNGTS is a relatively small but important conduit for gas into New England, with firm capacity of 210 MMcf/d. The planned Portland XPress expansion project potentially could expand the system by 200 MMcf/d, with additions built in phases and some existing capacity turned back by existing shippers for the project, Cynthia Armstrong, PNGTS' director of marketing and business development, said at the LDC Gas Forums Northeast conference in Boston. Armstrong said the targeted in-service date for the project is November 2020.

"The Portland pipeline is full," she said. "The Portland pipeline needs to expand. We're working on that right now."

PNGTS is one of only a handful of pipelines that deliver into the New England region, where markets have been historically volatile due to large fluctuations in regional demand and only limited options for gas supply, despite its proximity to the Marcellus and Utica shale plays in Appalachia. An expansion of the Portland system would open up supply options, potentially reducing the severity of wintertime price spikes for which the region is well known.

Despite its potential to smooth out scarcity-driven price spikes, the expansion may not result in lower direct costs downstream, as gas sourced from Canada typically carries a higher cost and pipeline transportation rates flowing into East Canada are typically higher than on U.S. pipelines bringing gas from the Appalachian Basin. The estimated toll to flow gas from the Dawn Hub in Ontario to the Portland-Tennessee interconnect in Dracut, Mass., is about $1.70/MMBtu, including variable and reservation charges.

Expanding access to Canadian supplies would likely do more to limit the upside on prices in New England, rather than lower the downside.

The price of gas upstream, however, may see downward pressure as high-capacity pipeline expansion projects bring more US shale gas into Ontario. Two major expansions are planned to enter service over the next 18 months, including the 3.25-Bcf/d Rover Pipeline project and the approximately 490-MMcf/d Northern Access project on from National Fuel Gas Supply Corp. Rover is planning to bring Phase 2 of its project into service in late 2017, which would deliver up to 950 MMcf/d of Northeast shale gas into Michigan and the Dawn Hub in Ontario. The Nexus project, which has yet not been approved by the Federal Energy Regulatory Commission, would further boost Midwest and Ontario supply options.

There also are several other planned and proposed expansions designed to increase supply options for New England.

PNGTS in December last year filed its Continent to Coast project with the Federal Energy Regulatory Commission, which would expand the certificated import capacity of the pipeline from 178 MMcf/d to 210 MMcf/d. From the south, projects on the Algonquin Gas Transmission LLC system, including the under-construction Atlantic Bridge project and the proposed Access Northeast expansion, are designed to increase access to lower-cost shale supplies.

The challenge with accessing shale gas, however, is that expansions on Algonquin's system are costly, and face heightened backlash from local residents and environmentalists along the pipeline’s densely populated path.

Other options for regional gas supply include LNG

Besides pipeline gas, LNG continues to be a good source of supply to the region. Gaz Métro LP, the main distributor of natural gas in Quebec, has tripled the annual capacity at a Montreal LNG facility to more than 9 Bcf. Some of the output will go into storage to be used during the peak winter demand period in New England. Gaz Metro also has links to PNGTS via PNGTS' interconnect with TransQuebec and Maritimes Pipeline.

At the Boston conference, Guillaume Brossard, director of LNG market development for Gaz Metro, said his company sees its LNG as part of the solution for meeting New England's gas needs.

"The purpose of the project is not to export LNG overseas," he said. "The purpose is really to support the regional markets in Quebec and the Northeast region."

Filing with regulators to be made in summer

Armstrong said the Portland XPress expansion, which will be filed with regulators later in the summer, is especially important because it represents PNGTS' last opportunity for "cheap build capacity." Once it gets past the new volume, it would need to potentially add a greenfield compressor, which would cost more and take longer, Armstrong said.

The scope of the project includes compression additions at existing stations, according to a slide presentation Armstrong released. It will be phased in over a three-year period. The expanded system will include 100 MMcf/d of expiring contracts and a net build of 100 MMcf/d, bringing total capacity on the system to about 300 MMcf/d, Armstrong said.

"It's not too late to be in the project," Armstrong told the conference.

Harry Weber is a reporter for S&P Global Platts, which like S&P Global Market Intelligence is owned by S&P Global Inc. Eric Brooks, also of S&P Global Platts, contributed to this article.