Market Snapshot: Pipelines Transitioning to Bring More U.S. Natural Gas to Ontario and Quebec

Release Date: 2015-02-05

Historically, the majority of natural gas that supplied Ontario and Quebec originated from Western Canada and was transported on the TransCanada Mainline pipeline. Natural gas on the Mainline also supplied gas consumers in the U.S. northeast via interconnecting pipelines. Starting in late 2008 however, growing production from shale gas formations in the U.S. initiated shifts in traditional pipeline flows. Production growth in the U.S. northeast has been so large that more and more natural gas consumed in Ontario and Quebec is shale gas produced in Pennsylvania, West Virginia and Ohio. Production from these states grew from approximately 1,400 million cubic feet per day in 2008 to over 11,000 million cubic feet per day in 2013.

Between 2000 and 2008, approximately 900 million cubic feet per day moved from Canada to the U.S. via the Niagara export point in southeastern Ontario. However, as production in the U.S. northeast increased, flows began to decline at this export point. Starting in 2009, exports occurred during high demand winter months but decreased significantly during the summer. Within two years, flows at Niagara averaged near zero. At the end of 2012, TransCanada made pipeline modifications enabling U.S.-produced gas to flow into Ontario. Since then, flows have physically reversed, with imports averaging 400 million cubic feet per day.

Figure Source and Description

Source: NEB, monthly volumes were calculated using exports less imports, as reported to the NEB from natural gas shippers; bars above zero represents net exports and below zero are net imports.

Description: This bar graph shows average monthly volumes of natural gas measured in million cubic feet per day at a point located near Niagara Falls, Ontario, close to the Canada-U.S. border from 2006 to 2014. From 2006 to late 2008, exports were steady, averaging approximately 900 million cubic feet per day. Starting in 2009, exports started displaying seasonal peaks, increasing in the winter. During 2011 and 2012, volumes averaged close to zero. In late 2012, volumes are negative as Canada began to import natural gas at Niagara from the US. Since then, import volumes averaged almost 400 million cubic feet per day.

 

At the Iroquois export point, located south of Ottawa near the Canada-U.S. border, south-bound flows to the U.S. have also declined in response to growing northeast US production. Flows have decreased from relatively constant, averaging approximately 1,100 million cubic feet per day, to becoming highly seasonal beginning in 2009. According to recently filed regulatory documents [Document A4A4K3], TransCanada stated that these are signals that Iroquois is trending toward becoming a physical import point into the Mainline system.

Figure Source and Description

Source: NEB, monthly volumes were calculated using exports less imports, as reported to the NEB from natural gas shippers.

Description: This bar graph shows average monthly volumes of natural gas measured in million cubic feet per day at a point located near Iroquois, Ontario, close to the Canada-U.S. border from 2006 to 2014. From 2006 to early 2009, volumes at Iroquois were steady, averaging approximately 1100 million cubic feet per day. From 2009 to 2014, volumes display a pattern of peaks during the winter months and the lower volumes for the remainder of the year. In the summer of 2014, volumes reached their lowest levels in August 2014, averaging 60 million cubic feet per day.

 

To enable more flow of U.S. sourced natural gas into Ontario and Quebec (and even the Maritimes, through interconnecting pipelines), regional pipeline companies are in the process of expanding existing infrastructure. By holding an open season (a process for soliciting interest from parties interested in shipping natural gas), pipeline companies will gauge interest from potential shippers. Early 2015 saw several companies, such as TransCanada Pipelines, Portland Natural Gas Transmission System, and Iroquois Gas Transmission System hold open seasons. Results of these open seasons, amongst other factors, will determine whether new pipelines will be built and ultimately how much gas will be transported north from the U.S.

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