Calgary — The Alliance Pipeline, which transports natural gas from northeast British Columbia, western Alberta and northwest North Dakota, is undergoing a change in its business organization.
An open season has also been announced, which, if successful, would result in a 25 per cent expansion of the system’s capacity.
The 3,848-kilometre long, 36-inch Alliance Pipeline was originally founded by several producer and pipeline companies, but in the lead up to its construction in 1999-2000, its ownership base eventually consolidated down to an “alliance,” as it were, of Enbridge and Pembina Pipeline.
Now, after 18 years in operation, those companies are shaking up Alliance somewhat, with an announcement on March 27 of a new operating model.
In a press release of that day, Alliance said, “Alliance Pipeline Ltd. today announced that Enbridge Income Fund and Pembina Pipeline Corporation, each of which owns either directly or through affiliates, 50 per cent of Alliance, have decided to convert the operation and administration of Alliance Pipeline into an owner-operator model.
“Pembina and Enbridge have been working together to develop a business structure for Alliance that allows the business to safely and efficiently deliver value to all stakeholders. Upon implementation of the new operating model, Alliance's functions will be split between Enbridge and Pembina.
“The implementation of this new model is expected to be completed during summer 2018.”
Inquiries to Alliance were deferred to Enbridge and Pembina.
Suzanne Wilton, senior advisor, media relations, with Enbridge, explained the new business structure allows both businesses to continue to operate the pipeline. It’s a strategic alignment, she said.
“Alliance’s functions will be split,” she said. Enbridge will manage the pipeline’s operations, while Pembina will be responsible for commercial and finance functions.
To that end, on March 28, Pembina announced an open season on the Alliance Pipeline for expansion capacity commitments. The open season is for an estimated 400 million cubic feet per day of additional firm service, commencing at an anticipated in-service date in the fourth quarter of 2021. The two-month open season begins March 28, 2018 and closes May 30, 2018.
When the pipeline was initially built, it was planned with the capacity for this sort of expansion at a later date, through the installation of additional compression along the line.
Alliance receives natural gas in British Columbia, Alberta and North Dakota and carries it to the Chicago market, delivering approximately 1.6 billion cubic feet of natural gas per day. Pending regulatory approval, Alliance will increase capacity by approximately 25 per cent through the addition of compression and other facilities to its system. The planned in-service date is November 2021.
The offer is available to both existing and prospective shippers, for a minimum bid term of 15 years. Two open seasons are being held concurrently, one for Canadian receipt and delivery services and one for United States transportation service. Parties interested in acquiring capacity from the Canadian receipt points must participate in both open seasons to obtain delivery service to Chicago.
Subject to the results of the open season, this approximately $2 billion project will be backstopped by long term, take-or-pay contracts that will provide customers with long term, firm receipt service with the certainty of fixed fees.
“The proposed expansion of Alliance Pipeline will increase access to premium markets and improve our service offering to current and potential customers,” said Jason Wiun, Pembina's senior vice president and chief operating officer, pipelines. “While our extensive discussions regarding the expansion have indicated strong shipper interest, a successful open season process is a crucial step towards advancing the project, and providing our customers with additional service and access to the premium Chicago market.”