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Gold/Mining/Energy : KERM'S KORNER -- Ignore unavailable to you. Want to Upgrade?

To: Kerm Yerman who wrote (11850)	7/24/1998 4:35:00 AM
From: Kerm Yerman	Read Replies (1) \| Respond to of 15196

Financial Post / TCPL Trims Expansion To Fit Gas Demand The Financial Post July 24, 1998 TransCanada PipeLines Ltd. read the writing on the wall when cutting $580 million out of its ambitious pipeline expansion plans, a leading energy executive said yesterday. Gwyn Morgan, president and chief executive of Alberta Energy Co., said that increased competition and the risk shareholders will be on the hook for unused capacity likely inspired the move. Canada's dominant natural gas transporter is now applying to the National Energy Board to spend $404.5 million in 1999, a 59% drop from its filing three months ago. In late April, it planned to spend $984 million to add 275 million cubic feet a day of capacity to its system. The additional space, to come from 560 kilometres of pipeline and four compressors, was designed to carry gas to Eastern Canada, and the U.S. Midwest and northeast. Now those demands will be met through 156 km of pipeline and four compressors, adding 108 million cu. ft. of capacity. Another 100 million cu. ft. will be provided by other companies. "People are realizing they better use all their efficiencies and see what can be done before you build new pipelines," Morgan said. Regulators in Canada and the U.S. are forcing investors to bear the cost when pipeline companies build unneeded capacity, he said. There are also questions whether Canadian energy firms are drilling enough gas wells to replace aging fields and fill the pipelines coming onstream in November. These will add 1.1 billion cu. ft. a day of capacity. One consultant suggests the increased maturity of pipeline infrastructure in North America is another reason for the change in TCPL's plans. Through swaps, storage and displacement, gas can be moved easily from one line to another, said Jim Oosterbaan, vice-president of Canadian gas services for Calgary based Ziff Energy Group. Some U.S. pipelines have space because customers are not renewing long-term contracts, he added. This is creating opportunities for TCPL to deliver gas to Eastern Canada and the U.S. without building lines. TCPL's expectation of adding almost half its new capacity through such arrangements shows how the gas industry is evolving. "This is a good step forwards. TransCanada is looking at other innovative ways to meet customer needs without building incremental pipeline capacity." Company spokesman Gary Davis said a recent survey of customers found changes in business plans that caused it to rethink the application. "There are a lot of ways to meet the growing demands of the marketplace without building new pipe. That's being responsible to both our shareholders and customers," he said. The revised application will add almost 1› per thousand cu. ft. to the cost of moving gas across Canada, unchanged from the original estimate. TCPL shares (TRP/tse) closed yesterday at $24.80, up 15›.