New U.S. pipeline expected to lower natural gas prices in Central Canada

CALGARY _ Central Canadian consumers can expect to pay less for natural gas to heat their homes as a new pipeline connects shale gas from the northeastern United States to the Dawn storage hub near Sarnia in southwestern Ontario.

The Rover Pipeline last week won approval from the U.S. energy regulator to begin shipping at its capacity of 3.25 billion cubic feet per day of natural gas, transporting the fuel from Marcellus and Utica shale wells in the northeastern U.S. to American markets and, via the Vector Pipeline connection, to the Dawn hub for distribution into the Canadian market.

Chris Shorts, director of storage, transportation, marketing and utilization for Union Gas Ltd., operator of the Dawn hub, says the new source of gas will tend to push natural gas prices lower, although he couldn’t estimate what that will do to an average consumers’ bill.

He says Union Gas last year increased its capacity to accept gas on the Vector connection by about 300 million cf/d to about 1.8 billion cf/d, although the actual amount delivered each day will vary according to sales contracts between shippers in the U.S. and buyers in Canada.

Natural gas volumes arriving at Dawn are already being affected by about 1.4 billion cf/d in western Canadian natural gas added late last year after TransCanada Corp. brought in discount tolls to increase the use of its Canadian Mainline gas system.

Consumer natural gas rates in Ontario and Quebec are affected by market gas prices but also take into account transmission and management costs.

“It will have a downward pressure,” said Shorts.

“Prices are as low as they’ve been in the last 10 years and there’s more downward pressure, because of the incremental supply, than there would be upward pressure.”