Return to Sender Natural Gas Exports - The Battle for a New Dawn

Source: NEB (Click to Enlarge)

The map below has the main interstate pipeline interconnects coming into Dawn marked. Historically the first interstate US pipeline that connected to Dawn was the Panhandle Eastern Pipeline (see purple arrow on the map - PEPL) interconnect at Windsor, ON (Ojibway). Energy Transfer Partners acquired PEPL in 2011 and its gas supplies are from the Southwest US (Texas Panhandle and Oklahoma, the Midwest, the Rockies and the US Gulf Coast via the Trunkline system. Import volumes into Canada at Windsor since January 2009 have averaged 125 MMcf/d. 

In 1959 the Dawn to Parkway transmission line (red line on the map) was built to link Dawn to TransCanada Pipeline (TCPL) supplies at Parkway and the Enbridge gas distribution system in Toronto. The Dawn to Parkway transmission system is bi-directional and can now receive gas from the Marcellus that crosses the US border at Niagara (see Return to Sender - Flowing Marcellus Gas into Eastern Canada). Dawn to Parkway currently has capacity to transport 6.3 Bcf/d.

In the mid 1960’s the Great Lakes Gas Transmission (blue arrow on the map - GLGT) pipeline was built by TCPL to provide an alternative source of supply to the Midwest and Dawn from Western Canada.  The GLGT system is also linked to US Southwest and Gulf Coast supplies from the ANR pipeline (owned by TCPL). Winter demand into Dawn from GLGT is about 1 Bcf/d. Also connecting into Dawn via the St. Clair border point is the Vector Pipeline (green arrow on the map). The Vector pipeline system extends from the Juliet, IL compressor (south of Chicago) through Indiana, Michigan and then across the border to Dawn. Vector receives supplies from the Alliance system that bringing wet gas from Western Canada via the Bakken to Aux Sable in Chicago (see When Liquids Are Not Liquids). Vector also receives gas from Northern Border (another TCPL pipeline)  that carries Canadian, Bakken and Rockies Gas to Chicago. Vector is a joint venture between Enbridge (60 percent ) and DTE Energy (40 percent). DTE Energy owns the Michigan Consolidated (MichCon) gas distribution system. The Bluewater interconnect shown north of Dawn on the map provides access to storage and supplies from the GLGC, MichCon, Vector and ANR systems. The current capacity of the pipelines feeding into the Dawn Hub is 4.5 Bcf/d.

Source: Union Gas and RBN Energy (Click to Enlarge)

We mentioned earlier that the NEB import data contains a mixture of gas imported in the Dawn region – some of which originates in Canada. The total imports into Dawn are between 1.75 and 2.0 Bcf/d. Looking more deeply into the NEB break down we can estimate that the gas coming into Canada at Windsor and St Clair – about 1.1 Bcf/d is primarily supplied from US pipelines.  That gas mostly originates from the Gulf Coast, the Midwest and the Rockies although some gas that originates in Canada can flow from Northern Border and Alliance into the Vector pipeline. The rest of the supplies coming into Dawn must therefore originate from TCPL pipelines. Subtracting the 1.1 Bcf/d at Windsor and St Clair from the total at Dawn (1.75 to 2.0 Bcf/d) leaves between 0.7 and 1.0 Bcf/d coming into Dawn from TCPL pipelines originating in Western Canada.

As you can tell the flows into Dawn are quite complicated to untangle but there are two main trends to note. First as we learned in Part I of this series supplies from Western Canada on the TCPL system are declining and second that demand for natural gas in Ontario is set to expand 1.25 Bcf/d from 2.0 Bcf/d in 2011 to 3.25 Bcf/d by 2020 – mostly due to increased natural gas generation. That means that demand at Dawn is growing and new supplies to meet that demand would traditionally expect to come via US long haul pipelines supplied from the Gulf Coast, Midcontinent and Rockies. That was the old system and it is ending.

Here is why. The enhancements that we described in Part II of this series now permit Marcellus and Utica gas to displace Western Canadian supplies at Niagara. A 2012 proposal to build a new pipeline into Dawn from the Utica shale is now poised to further displace supplies into Dawn from traditional US long haul suppliers as well.

The proposed Nexus Gas Transmission pipeline is a joint venture (one third each) between Enbridge, DTE and Spectra (the owners of Union Gas). The map below shows the planned route (large blue arrow) from the Western Pennsylvania and Eastern Ohio Utica shale basin around the tip of Lake Erie and into Dawn on the Vector pipeline. The pipeline would be approximately 250 miles long and have a capacity of at least 1 Bcf/d. The project completed a successful open season in November 2012 and now waits for permitting and FERC approval expected in 2015. The current projected in-Service date is late 2016.

Source: Nexus Gas Transmission (Click to Enlarge)

The new pipeline would establish a direct route to the Ontario and Eastern Canadian markets for western Appalachian producers that will put them into competition with Marcellus supplies from Eastern Pennsylvania and New York that now cross the border into Ontario at Niagara. The project will displace existing flows into Dawn from TCPL owned pipelines (GLGT, ANR and Northern Border) and the Energy Transfer PEPL pipeline. The project increases the gas flowing into Dawn on the Enbridge and DTE owned Vector pipeline.

The Nexus Gas Transmission project is one more step in the fast moving process where expanding Marcellus and Utica gas supplies replace traditional volumes from Western Canada to Eastern Canada and the Northeast US. Nexus turns the screws one notch tighter by also replacing traditional supplies into Dawn and the Michigan peninsula from US long haul pipelines such as ANR and PEPL. This is the “Great Flow Reversal” in action and it is only the beginning.

 

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