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Gold/Mining/Energy : Canadian Oil & Gas Companies
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To: Bearcatbob who wrote (7578)9/13/2000 12:41:22 PM
From: SofaSpud  Read Replies (1) of 24921
 
Bob / Alliance

There was quite a bit of discussion on Alliance on this thread a couple of years ago. I don't have time right now to go back and tell you exactly where, but it would be worth your while to browse around.

I'm not expert by any stretch, but I was trying to at least pay attention when the issue first came up. When Alliance was first proposed, it was thought by some to simply be a threat. A number of producers were dissatisfied with TCPL's toll structure, as well as the ownership of liquids. Keep in mind that this was before the Nova/TCPL merger. Nova operated the gas gathering system within Alberta. One thing they did was to operate straddle plants to strip out the liquids for the petrochemical business. Producers didn't feel adequately compensated.

One reason that there was suspicion that the Alliance proposal wasn't for real was the fact that it didn't seem possible to fill it and all the existing and proposed pipe capacity. In fact, once Alliance was far enough along, TRP backed off on an expansion of their own export capacity.

So where is the gas coming from? Some of it is indeed coming from TCPL's system -- note the chart:
bigcharts.com
Not all of the weakness was due to botching the Nova acquisition -- some of it was a result of losing contracts to Alliance.

Bottom line is, as russett pointed out, that Canadian producers now get the U.S. price for NG, less shipping costs. That's a huge change from the situation they faced up until a few years ago. Before deregulation, they were forced to sit on 20 years supply or some such number. Now demand exceeds supply. Glory days, while it lasts.
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