Alliance Gas Pipeline: Early, Late, or Just in Time?
secured on the regulatory side of the business, while significant profits are obtained on the non-regulated side.
On the other hand, however, there is much uncertainty about the role of Westcoast and Enbridge in the future energy industry. As seen in Figure 3, variations in recent stock performance for these various investors seem to reflect these differences in size and stature.
Westcoast is different from the remaining companies in that it lacks a distinct presence. Westcoast has the most to gain and the most to lose from a full success for Alliance.
Westcoast also has a 30 percent equity interest in Vector, a 100 percent interest in Millennium West in Ontario, and a 21 percent interest in the Millennium project in New York. Westcoast's utility, Union Gas, also will be connected to Vector and Millennium West. Millennium West will transport gas from Vector and other systems through Ontario and then under Lake Erie into New York state, where the Millennium Pipeline will transport natural gas into New York City. This pipeline initially will have a capacity of 700 MMcf per day. 4 Union, which also owns 137 Bcf of working gas storage capacity, is the largest holder of storage capacity in Canada and among the largest in North America. Westcoast's strategic importance will grow in North America if natural gas-fueled generation markets develop as expected; that is, if supplies are available to fill the pipes at competitive rates.
In the early 1990s, the strategic reach of Westcoast largely was contained to the British Columbia border, where it was involved in gathering and processing raw natural gas and then transporting it to markets. The only other major gas company in British Columbia was BC Gas, which distributed gas in the populated Vancouver area.
The dominance of Westcoast in British Columbia soon will be reduced when BC Gas begins transporting 250 MMcf of Alberta gas within British Columbia on its Southern Crossing System. In addition to reducing Westcoast influence in the province, that system will raise natural gas prices in the Northwestern United States and California in the short-run. Less Canadian gas will be available for U.S. markets at current prices, so customers in the California and the Pacific Northwest will need to bid more for Canadian supplies. These factors should boost prices for gas in the U.S. Rockies, and boost incentives to move that gas east and west within the United States.
Note, however, that Westcoast failed in two targeted areas in the 1990s: (1) marketing natural gas, and (2) owning and managing gas utilities in Canada. During the 1990s, it had joined with Coastal to form the gas and power marketer Engage Energy, and had purchased several utilities, including Centra Manitoba. This year Coastal ended the Engage relationship, and Engage ranked only No. 11 in the Gas Daily 1999 survey of gas marketers. 5 It marketed 5.6 Bcf per day, a decline of 1.4 Bcf per day from its previous year's level. Enron, ranked first among marketers by Gas Daily, marketed 13.3 Bcf per day. Westcoast also sold Centra Manitoba, the gas