Benefits are still some years away for PNG’s customers

Pacific Northern Gas (PNG) customers won’t benefit directly from a $50 million deal selling its stake in a project that would have expanded its northwest pipeline capacity.

Pacific Northern Gas (PNG) customers won’t benefit directly from a $50 million deal selling its stake in a project that would have expanded its northwest pipeline capacity.

The money, paid by major energy companies Apache and EOG Resources for PNG’s 50 per cent ownership of the planned Pacific Trails Pipeline, will stay with the company and its shareholders, says PNG official Greg Weeres.

“I want to make it quite clear that all of the cost and the risk was undertaken by our shareholders,” said Weeres, adding that at no time was there any money used from customer utility payments to develop the pipeline project.

PNG has spent $7.5 million over the past five years on the Pacific Trails project. It will be deducted from the Apache/EOG proceeds, leaving the rest to be paid out in shareholder dividends or, perhaps, invested in other projects.

And because the Pacific Trails project was handled outside of PNG’s function as a gas delivery utility, the sales deal is not subject to scrutiny by the BC Utilities Commission.

Weeres said PNG’s board will spend the next several weeks deciding what to do with the sale money. The next board meeting is early next month.

But while PNG’s customers won’t benefit from the sales deal, they will from an agreement the company has to operate and maintain the line and to charge for delivering gas when it does go into operation, said Weeres.

“Let me tell you that has always been our view and that was a factor in our negotiations that there would be benefits flowing to our customers from this,” he said.

Weeres said the company is well aware of the price shocks its northwest customers have endured to cover losing large gas users such as Methanex, Eurocan Pulp and Paper and Skeena Cellulose.

Those industrial customers had been paying a lot of the costs of maintaining PNG’s pipeline and it’s those costs which have been passed along to the utility’s remaining customers in the form of substantially higher rates.

Weeres said it is still too early to outline the dollar value the Pacific Trails operations agreement will mean to customers, but said they would be “very, very, significant.”

He said the key is for PNG to run as much gas as it can through its system to raise revenues which can then lower costs for everyone else.