Canada's Energy East Pipeline Project

A subsidiary of Canadian energy company TransCanada has proposed a crude oil pipeline running 4,600 kilometers from Alberta and Saskatchewan to Saint John, New Brunswick.  The proposed Energy East Pipeline Project would enable Western Canadian crude oil to be shipped east across six Canadian provinces, expanding economic opportunities for refining and export -- but like other major pipeline projects, the Energy East project faces regulatory hurdles.

On March 4, 2014, Energy East Pipeline Ltd., a wholly owned subsidiary of TransCanada Oil Pipelines (Canada) Ltd., proposed the project which entails the conversion of about 3,000 kilometers of existing natural gas pipeline to an oil transportation pipeline, new pipelines in Alberta, Saskatchewan, Manitoba, Ontario, Québec and New Brunswick, and marine facilities that enable access to other markets by ship.  If built, the $12 billion project could carry up to 1.1 million barrels of crude oil per day.

The major motivation behind the line is the relative surplus of Western Canadian crude oil, including fuel produced from the Alberta oil sands.  While Alberta and Saskatchewan produce substantial oil, relatively little capacity to ship that crude to refineries means relatively low prices for producers.  Meanwhile, refineries in Quebec and Atlantic Canada currently receive 86% of their crude oil from foreign sources.  TransCanada pitches the Energy East project as giving these Eastern Canadian refiners access to "reliable, low-cost Western Canadian crude."  The developer also points to positive economic development impacts, including about 10,000 jobs and an estimated $35 billion added to Canada’s gross domestic product over 40 years, as well as the relative safety of shipping oil by pipeline as opposed to by rail or truck.  Notably, the project also allows TransCanada to make better use of its existing natural gas pipeline system, which has excess unused capacity.

Like the Keystone XL pipeline in the U.S., the Energy East project faces opposition from both local siting concerns and global worries about the environmental impacts of "tar sands" crude production.  Some have also expressed concerns that the project would disrupt natural gas flows to Canadian consumers, although TransCanada has said that it has plans to build more lines to meet any increased demand.

Under Canadian law, interprovincial pipelines are federally regulated by Canada's National Energy Board (NEB).  According to its website, TransCanada expects final regulatory approval in the fourth quarter of 2015, with the project commissioned and placed in service in 2018.  How the regulatory process plays out will affect when -- and whether -- the Energy East pipeline project moves forward.

Shell announces LNG plants for transportation sector

Energy company Royal Dutch Shell PLC has announced plans to build two liquified natural gas (LNG) plants in North America to produce fuel for marine and heavy-duty on-road transportation.

Shell, a global group of energy and petrochemicals companies, may be most famous for its roadside gas stations, but also operates businesses in crude oil and natural gas production, refining, marketing, and research and development. According to a press release issued yesterday, Shell and its affiliates now plan to develop two liquefaction units to turn natural gas into LNG.

By cooling natural gas to around -260°F, it can be liquefied.  The resulting LNG takes up significantly less volume than the gas did, making it easier to ship and store.  Unlike gas taken directly off a pipeline, LNG can also be used as a mobile fuel source for transportation.  Compared to oil-based fuels such as diesel and gasoline, LNG can be less expensive and may create fewer emissions of carbon dioxide and pollutants.

Shell's newly announced plants will be built in Geismar, Louisiana and Sarnia, Ontario, Canada.  The Geismar plant will supply LNG along the Mississippi River, the Intra-Coastal Waterway and to the offshore Gulf of Mexico and the onshore oil and gas exploration areas of Texas and Louisiana.  Shell is partnering with companies including subsidiaries of Martin Resource Management Corporation and Edison Chouest Offshore to supply LNG fuel to marine vessels that operate in the Gulf of Mexico.  Under Shell's vision, LNG produced at Geismar will be barged to Port Fourchon, Louisiana, where it will be bunkered into customer vessels.  Shell also announced plans for a similar liquefaction unit at its Shell Sarnia Manufacturing Centre in Sarnia, Ontario, Canada.  The Sarnia project is designed to supply LNG fuel to all five Great Lakes, their bordering U.S. states and Canadian provinces and the St. Lawrence Seaway.

Each facility will be relatively small-scale, capable of producing 250,000 tons of gas per year. According to Shell, pending final regulatory permitting, the liquefaction units may begin operations and production in about three years.  Shell is currently developing a similar gas processing facility in Alberta, Canada, and plans to sell LNG at truck stops in that province.

Several years ago, energy companies rushed to develop LNG import terminals in the U.S. to increase supplies of natural gas in the interstate pipeline system.  Hydraulic fracturing and the resulting development of feasible production of domestic natural gas from shale resources turned LNG imports' economics on their heads.  Now that natural gas in most of the U.S. is significantly cheaper than imported LNG, companies like Cheniere Energy Inc. are now seeking to export LNG to other countries.  Domestic use of LNG in the transportation sector represents an alternative way for energy companies to profit from the shale gas boom.

August 15, 2011 - Canadian utility versus distributed solar

State and provincial governments are implementing programs designed to promote the growth of small-scale distributed renewable energy projects like solar photovoltaic installations.  For these programs to succeed, new distributed energy projects need to be able to interconnect into the existing utility grid on a fair and predictable timeline.  For this reason, feed-in tariff and other distributed generation programs must work hand-in-hand with utility tariffs requiring fair interconnection access – but some solar and renewable industry groups are concerned that utilities may not be honoring these obligations.

A small solar array serving the Utah Communications Agency Network radio system atop Beaver Mountain, UT.

Consider the example of the Canadian province of Ontario.  The Ontario Power Authority – the entity charged with ensuring an adequate, long-term supply of electricity in Ontario – offers feed-in tariff programs for qualified generation.  Ontario’s “micro-FIT” program gives developers of small renewable power projects – 10 kW or less – long-term contracts to sell the projects’ output at a fixed price.  For rooftop solar projects, these contracts pay 80.2 ¢ per kWh for a 20-year term – about ten times the most recent regulated retail electricity price in Ontario.

As anticipated, this program has drawn interest from thousands of developers of small generating units – perhaps as many as 25,000 by earlier this year.  Each of these projects is entitled to interconnect to the electric grid in a timely fashion, but doing so requires the local utility to evaluate the technical and engineering aspects of the interconnection to ensure safety and system reliability.  For example, a utility must formally offer to interconnect with a project within 15 days if it is at an existing interconnection point, with actual interconnection to be completed within 5 days after the utility receives its customer’s payment and signed agreement.

Some utilities are having trouble complying with this schedule.  In a case currently pending before Ontario’s energy regulator, one utility has asked for a waiver of the interconnection timeline.  Hydro One Networks Inc.’s April 2011 petition to the Ontario Energy Board, docketed as case EB-2011-118, notes that it was in non-compliance on an estimated 442 interconnection applications based on the utility’s failure to meet tariffed deadlines.  As a result, the utility asked to be relieved of its scheduling commitments for six months.

Businesses, homeowners, and the solar installation industry have objected to this request, pointing out that they have already suffered great harm as a result of the utility’s failure to meet its interconnection timing deadlines.  Evidence submitted in the case suggests millions of dollars in lost revenue, layoffs, and business closures as a direct result of the utility’s missed deadlines.

The Ontario Energy Board conducted hearings on the utility’s waiver request, but has not yet issued a ruling.  When it does, it may affect not only people interested in solar energy development but moreover the balance between traditional centralized utility organization and Ontario’s pro-distributed generation feed-in tariff policy.

August 18, 2010 - quick update

Quick update today.  In Massachusetts, candidates for governor are debating the merits of offshore wind including the Cape Wind project.

President Obama declares his clean energy policy will create 800,000 jobs by 2012.

Wildly large numbers coming out of an Ontario, Canada feed-in tariff: the Ontario Power Authority is lowering the rate paid to some landowners with ground-mounted solar panels to 64.2 cents per kilowatt hour from the original 80.2 cents.  I will look more into this soon.

May 26, 2010 - Lake Erie to host first freshwater offshore wind farm in USA?

General Electric announced this week that it has been selected to provide wind turbines for the Lake Erie Energy Development Corp wind project, which is expected to be the first freshwater wind farm in the United States. The Lake Erie project is under development off the shores of Cleveland, Ohio. GE will initially furnish five 4 MW turbines, which should start operations in 2012. Ultimately, the nonprofit development company wants up to 1,000 MW of installed capacity by 2020.

There's a fair bit of excitement about this project. It will be the first freshwater wind farm in the USA. However, Canada is ahead of us, with the Windstream Wolfe Island Shoals project in Lake Ontario. Windstream is farther along in the development process. Last month, it was awarded a contract by the Ontario Power Authority to buy the 300 MW project's output under a feed-in tariff program, with an initial price of 18.5 cents (CAD) per kWh.

May 20, 2010: E2tech forum with Michael Stoddard; Ontario offshore power

Today, a quick note from the Gilsland Farm property of Maine Audubon in Falmouth, Maine. This morning, Preti Flaherty's Climate Strategies Group sponsored an E2Tech forum on energy efficiency, with Efficiency Maine Trust executive director Michael Stoddard as the special guest. Michael gave a good presentation to a full-house audience on Maine's comprehensive energy efficiency efforts, and on his role as executive director in making that happen.

Thanks to E2Tech for throwing another fine event. It was a great opportunity to learn from Michael about state efficiency policy and programs, while meeting up with clients, friends, and interesting new people.

I'm looking forward to the next E2Tech event, a forum on ocean energy development and policy, to be held June 24 in Falmouth. Here's a link to the registration page.



My fellow LinkedIn Energy & Utilities Network member John de Vellis tipped me off to an interesting offshore wind generation project in Ontario, Canada. Last month, Windstream Wolfe Island Shoals Inc. was awarded a contract by the Ontario Power Authority to buy the output of Windstream's 300-megawatt project off-shore in Lake Ontario. Reports suggest the project will cover about 48,000 acres, generally in water between 10 and 20 feet deep.

This project is a bit farther along than Cape Wind. Recall that Cape Wind has struck a deal with the local utility, but that Massachusetts regulators at the DPU still get to review and approve (or deny) the proposal. In Ontario, the Ontario Power Authority has already performed that review, and -- under a different regulatory structure, namely a feed-in tariff program -- approved the contract at 18.5 cents per kWh.

While Ontario's 18.5 cents/kWh is lower than the Cape Wind proposal of 20.7 cents/kWh, what might be even more interesting is the difference between these contract prices and the market price for basic electricity. Ontario's market price is 3.44 cents per kWh. (American readers, how would you like to pay just 3.44 cents/kWh!) We can argue about whether 3.44 cents is "too low" to include environmental costs, but in the end, the Ontario offshore wind will cost over 5x (five times) what basic electricity costs in Ontario. Cape Wind is closer to 2.5x the local cost per kWh.

Has anyone seen an analysis of the increased adoption of renewables and renewable portfolio standards, and its impact on prices? What really is driving price increases, in your views?

4/9/10: an in-depth look at the rate impacts of Ontario's feed-in tariff and green energy policies

Today I'm taking a more in-depth look north of the border at what one Canadian province is doing to encourage green electricity generation -- and at the electric rate impacts of this policy.

As you may know, Ontario plans to eliminate its coal-fired power plants by 2014 and replace them with cleaner energy sources. In October, Ontario unveiled the Green Energy Act, which includes a set of feed-in tariffs that guarantee renewable generators fixed, above-market prices for 20 years to feed their production into the electricity grid. Yesterday, the province has announced 184 contracts for green energy projects, totalling 2,500 MW.

Minister of energy and infrastructure Brad Duguid said these contracts will generate 20,000 direct and indirect "green jobs" and attract $9 billion in private investment. In addition, Ontario is seeing interest in local siting of manufacturing facilities to produce the products and components needed to site renewable generation. In the last three months, Ontario has received commitments from both South Korea’s Samsung C&T Corp. and Germany’s Bosch Solar Energy to site manufacturing facilities in the province. It is assumed that the feed-in tariffs and contracts are required to incentivize this economic development activity.


But at what cost? The Globe and Mail has a good article detailing how Ontario is poised to face the highest electricity prices in Canada, replacing PEI as the province with the most costly power. Projections show that residential customers in Ontario were already facing a 25% rate hike, paying $300 more a year on average for electricity by the end of 2011. The green energy contracts will add another 5%, or $60 a year by 2012. Consumers' total cost, including distribution, may rise to 14.54 cents in 2011, while the average residential rate in the United States will rise just 2 per cent to 11.74 cents next year.

Simultaneously, a "smart grid"-related initiative will raise most residential rates even further. Ontario is introducing time-of-use billing, charging 9.3 cents per kWH during peak periods and 4.4 cents during off-peak periods. One forecast suggests this will result in a $50 a year increase for the average residential ratepayer. Of course, those ratepayers who can successfully shift their load to off-peak hours -- whether through careful management, or investment in appliances and technology systems that do the management for them -- might be able to reduce their costs through this move.

On top of all this, the province -- like many U.S. states -- is exploring tax hikes and broadening of the tax base to raise funds. In Ontario, a new harmonized sales tax will add 8 per cent to everyone’s bill starting July 1, or $98 a year for the average bill.

It will be interesting to watch as Ontario policymakers pursue these initiatives. Will there be ratepayer backlash? Or will ratepayers take the rate increases in stride, and feel like they're getting something -- freedom from coal-fueled power plants and their environmental impacts -- for their money? Time will tell.

01/21/10

Today the U.S. Senate Committee on Energy and Natural Resources the full committee will receive testimony from U.S. Energy Secretary Chu on the research and development priorities/imperatives needed to meet the medium- and long-term challenges associated with climate change. It's live at 10:00 a.m.

The Bangor Daily News ran an editorial today in support of increased investment in wind energy in Maine. The editorial staff cites the recent federal grant to the University of Maine - $12.4 million from U.S. Department of Commerce for a new offshore wind turbine test lab, the Advanced Nanocomposites in Renewable Energy Laboratory. This, in combination with the $8 million grant from the U.S. Department of Energy to create the Maine Offshore Wind Energy Research Center, will allow Maine to become a leader in offshore wind R&D. Professor Habib Dagher was clearly psyched, and Sen. Collins said the deep-water offshore wind energy industry eventually could bring in 15,000 jobs and $20 billion in investments to Maine -- and the BDN is now on board.

NYT reports that mogul T. Boone Pickens is revising his energy investment strategy, de-emphasizing wind energy, and refocusing natural gas from light passenger vehicles to commercial vehicles like semis and buses. Sounds like his wind love affair was short lived. Will he rekindle that spark?

Wisconsin is struggling with a sweeping new energy bill, including a renewable portfolio standard, tighter emissions standards for vehicles to California's levels, and open the door for new nuclear power development. Wisconsin is dependent on coal, and there is concern that this law would drive a shift toward more costly natural gas -- troubling both manufacturers who purchase power for industrial processes, and the coal industry.

North of the border: Ontario is signing a $6 billion deal with Samsung and Korea Electric Power to build and operate a 2,500 MW wind and solar power generation complex in Ontario. David Butters, president of the Association of Power Producers of Ontario, called the deal "secret" and criticized it for a lack of transparency -- and for undermining the feed-in-tariff program. Apparently Ontario has reserved 500 MW of transmission capacity for the project, which Butters described as
more than half the available transmission (capacity) in southwest Ontario."