APPrO comments on the OEB Gas Market Review
TORONTO, October 15 2010 - The Ontario Energy Board (OEB) has begun an extensive stakeholder process that will review and examine changes in the North American natural gas market to identify potential implications for Ontario. An overall objective of the review is “to assess how natural gas markets in Ontario are responding or adapting to changing market conditions.'
The Board intends to assess the impact of changing dynamics in North American natural gas supply markets, particularly due to increased shale gas production at Marcellus, on the Ontario energy sector. The Review will look at impacts over the next 3-5 years including the potential impact on prices, services and transportation infrastructure utilization.
A specific objective of the initiative is to determine the need for regulatory changes, if necessary, in response to potential impacts identified. Through the review the Board will consider, for example, what might be the implications of increased shale gas production:
• Will it change the flow pattern of natural gas? If so, will this increase the need for new pipeline services and routes and reduce the attractiveness of others?
• Will it impact the price of natural gas in Ontario arising from incremental supply and a potential increase in pipeline and storage facilities?
• Are there any regulatory implications? Is there a need for greater inter-jurisdictional regulatory alignment?
• Are there risks that, if realized, will change the outlook for shale gas (e.g., potential environmental issues that may impact shale gas exploration and development)?
To begin the process, the OEB commissioned ICF International to prepare a review of the North American market. The report emphasizes the importance of the growth in unconventional gas supplies, expectations for gas demand growth, changes to gas pipelines and storage, the impacts of supply and demand changes on natural gas price, and how all these market changes may impact the Ontario gas market.
APPrO made a submission to the OEB during the early stage consultations, emphasizing that gas-fired generators could be 1/3 of the total Ontario gas consumption by 2020, and that they are looking for the “lowest all-in landed cost at the burner tip.'
APPrO President Dave Butters identified key concerns of major gas consumers from the power sector as follows:
• Balance is needed between market mechanisms for rational development of upstream infrastructure and the public interest in assessing new long term supply arrangements.
• Transition in supply sources results in costs that are distributed inequitably as compared to the benefits.
In addressing these concerns, Mr. Butters recommended while the Board should carefully consider potential unintended consequences of approving new supply projects, such reviews should not discourage the need for pipeline systems to operate efficiently, and the fact that “ongoing evolution of storage, distribution and transmission services' will be necessary to meet generator needs. “Access to adequate competitively priced supply critical for the success of this market and Ontario’s power requirements,' he said.
For further information, please see the OEB website, or the APPrO magazine online: https://magazine.appro.org
APPrO is a non-profit organization representing more than 100 companies involved in the commercial generation of electricity in Ontario, including generators, suppliers of services, equipment and consulting services. APPrO members produce power from nuclear, hydro, fossil, wind, biomass and other energy sources. APPrO's members currently produce over 95% of the electricity generated in Ontario.
For further information contact:
David Butters, President
Association of Power Producers of Ontario (APPrO)
25 Adelaide St. E., Suite 1602, Toronto ON M5C 3A1
tel: (416) 322-6549 ext 231
fax: (416) 481-5785