Frank Zaski posted this to FERC this morning. Many of the same arguments can
be used against Nexus – even more potent ones – such as over half of Nexus
capacity is destined for Canada, costs are higher (see below), they are only
55% to 66% subscribed and an anchor shipper (Chesapeake) is almost bankrupt,
Energy Transfer is already subsidizing them.
There is
little Canadian interest in the Rover gas pipeline.
CANADA is a major
destination for Rover. It appears virtually all the gas they plan to ship thru
Michigan and the Market Segment is destined for Canada and Dawn. However, there
does not appear to be much Canadian interest in Rover gas primarily because its
delivered COST will be higher and many fear the strong potential for stranded
costs being passed on to ratepayers.
ROVER GAS
WILL COST CANADIANS MORE THAN GAS FROM OTHER SOURCES
In the most recent Ontario Energy Board (OEB) Natural Gas Market
Review (February 2016), a number of Ontario organizations voiced their
concerned with Rover (and Nexus) plans to ship gas to Dawn.
TransCanada
stated:
Transportation
paths from Marcellus/Utica via the Niagara, Chippawa and Waddington, New York
interconnect points are more cost effective for Ontario consumers than
Rover/Dawn.
The landed
cost of gas into the Enbridge EDA (Toronto) would be lower from Niagara ($4.90
$CAD/GJ) and Waddington ($5.30) than from Vector ($5.55), Rover ($5.73) or
Nexus ($5.82).
Firm
contracts for gas supply from New York to Ontario through Niagara and Chippawa
will rise to nearly 1.1 Bcf/d in the winter of 2016/17. TransCanada expects to
be able to service this reversal of flow for only $30 million.
The flow
reversal is proceeding with Waddington (NY) shipments to Ontario expected in
November of 2017. This reversal of flow will also be at low cost.
Western
Canadian (WCSB) gas will continue to flow to Ontario thru the TransCanada
Mainline, Great Lakes Gas Transmission and Alliance pipeline systems.
As in the US, Canadian gas supplies are at very high levels and
prices very low.
CANADIAN
BUSINESS ASSOCIATIONS representing industrial gas users, property
owners, power producers and manufactures write in Canadian OEB filings that
they basically DON’T WANT ROVER GAS:
Associations are concerned that the Dawn Parkway Expansion
Application revenues at current rates did not support the investment and that
SIGNIFICANT GAS RATE INCREASES will result.
Associations want to avoid “burdening pipeline builds” for the 40
– 50 year life of a pipeline and the potential to pay for stranded assets. They
recommend lower cost NY pipeline alternatives, market based, non-facility
solutions (such as displacement) and investing in technology to cut gas usage
and GHG.
The associations firmly believe Canadian regulators will act to
reduce GHG and natural gas consumption. “Ontario is likely at or very close to
peak gas consumption.” (In Canada, natural gas is seen as a contributor to GHG
gas emissions and not as a solution - as in the US.)
HOW MUCH
GAS DOES ROVER REALLY PLAN TO SHIP TO CANADA (and Michigan)?
Rover claims they are FULLY SUBSCIBED to ship 1.3 Bcfd to Dawn
thru Vector. However, Vector’s capacity is only 1.3 Bcfd and Nexus also plans
to ship (.76 Bcfd) thru Vector as well. How can these companies ship over 2.0
Bcfd thru a 1.3 Bcfd capacity pipeline?
The stated capacity of Rover’s Market Segment pipeline north of
Defiance is 1.3Bcfd. If all of this gas is destined for Canada, then apparently
no gas is planned for Michigan customers. No real Michigan customers were
identified in FERC filing, and Michigan’s Consumers Energy (CMS) stated that
Rover did not meet their requirements.
It appears Rover is not fully subscribed and has contracted for
only .9 Bcfd capacity on Vector. https://www.snl.com/SNLWebPlatform/Content/Industry/IOC/PipelineContractDetails.aspx?KeyInstn=4079497
Canada does not need this much extra gas – it is far more gas than
what currently flows to Canada thru Michigan and New York today.
FLAT
ELECTRIC DEMAND: The Ontario grid operator sees flat 18-month electric demand
thru 2017. 950 MW of wind and 140 MW of
solar capacity will be added during this period. https://www.snl.com/InteractiveX/article.aspx?ID=35876685&KPLT=4
Quebec already gets 99% of its electricity from renewable sources (mostly
hydro).
Except for a 100% ethane plant in Sarnia, no
new petrochemical plants are
planned for Eastern Canada.
There is little potential to ship Rover gas
to the US and Canadian East Coasts or for LNG export. US East Coast pipelines are destined to supply
those US states, and for the few US and Canadian LNG export plants possible,
they already have designated East Coast pipelines. No LNG plant north of
Maryland has received financial approval.
Summary
Rover cannot claim new sources or new markets. Considerable
Marcellus and Utica gas is already flowing to Eastern Canada thru Michigan and
especially the economical way thru New York. These existing pipelines provide
gas at lower cost, thru multiple locations and without Rover’s environmental
degradation.
Building Rover will negatively impact, if not destroy, over 9,000
acres of US forests, farmland, wetlands and other property. This is in addition
to intimidating thousands of property owners.
Rover’s
environmental degradation far outweighs any benefits to Canada or
Michigan.
