This spring, TransCanada launched service for its 230-MMcf/d Sundre Crossover expansion, increasing transportation capacity for moving Alberta natural gas production to the U.S. Pacific Northwest. That may seem like a trifling volume in the big scheme of the North American gas market. But considering that Canadian and U.S. producers already are locked in a heated battle for market share of U.S. demand and pipeline capacity, it’s enough for Canadian supply to gain ground. Since the Sundre in-service date, deliveries to the Kingsgate point at the British Columbia-Idaho border have ratcheted up to the highest levels in at least a decade. As a result, Canadian exports have managed to elbow out Rockies gas from the California market, and set off a ripple effect that’s pushing more gas east to the Midcontinent. Today, we examine the shifting gas flows in the West.
As we wrote in our recent Drill Down Report, Fight ‘Em Til You Can’t, and the On the Border blog series, Canadian and U.S. producers are engaged in an increasingly fierce fight for a piece of the demand pie in a number of key U.S. markets. Supply growth is worsening congestion, crowding pipelines on both sides of the U.S.-Canada border and increasing competition for transportation capacity and demand. From here on out, gains in flows from one supply source will likely have to come at the expense of the other.
Canadian exports already have been pushed out of the Northeast by Marcellus/Utica production, and the battleground has shifted to the Midwest and West regions. As recently as a month ago (on June 1), Canadian exports to the Midwest took a hit when Energy Transfer Partners increased Northeast-to-Midwest takeaway capacity on its new Rover Pipeline, this time extending its reach all the way to the Dawn, ON, market. We wrote about that in Are You Ready.