The Blue bulletin

In 2016, continental gas prices rose by more than $1.00 per gigajoule. This increase was due to a decline in drilling activities, limiting growth in production in the United States and Canada alike. The surplus of natural gas accumulated during the winter 2015 El Nino episode has finally been resolved in the United States. However, Canadian storage levels are still higher than the average for the past five years.

The increase in natural gas prices was more pronounced at the Dawn hub, in anticipation of moving supply from Eastern Canada’s three main natural gas distributors. Prices at Dawn have also been more volatile than elsewhere on the continent since mid-November.

The Régie de l’énergie has received from the Minister of Energy and Natural Resources a request for opinion on the measures likely to improve rate practices in the electricity and natural gas sectors. In doing so, the Régie has asked Énergir to submit a report presenting its position on rate structures and on the integration of new technologies.

Rate structures: Énergir submits the following position

• The new distribution rate that will emerge from file R-3867-2013 should be a means to achieve such commercial objectives as improving the competitive position of natural gas and developing new markets or new regions, particularly through the optimal level of cross-subsidization to ensure maximal use of the distribution network.
  
  

Integration of new technologies: Énergir adopts the following positions:

• Mechanisms should be put in place to accelerate energy efficiency efforts by ensuring that certain costs related to the Global Energy Efficiency Plan (GEEP) be considered as regulatory assets incorporated in the rate base.
• To ensure an increase in non-emitting renewable energy that can transit in the natural gas distribution system, measures should be adopted. These should include the provision of other services in addition to supply and transportation services, the adoption of a new formula to fix the renewable natural gas (RNG) purchase price and the implementation of a voluntary RNG purchasing model.
• To step up the substitution of more polluting forms of energy and protect the future competitiveness of natural gas consumers, compressed natural gas (CNG) and liquefied natural gas (LNG) should be used on a large scale to help develop road and maritime transportation markets and serve remote areas and consumers outside the network.
• To facilitate the energy transition sought by the 2030 Energy Policy, the regulatory framework should allow for greater diversity of services offered by gas distributors as part of their regulated activities and an increase in the type of assets that can be included in their rate base (without constituting a commercial monopoly).

Regardless of the type of furnace in your plant, there are a number of ways to improve performance. First, you will need to identify areas of heat loss:

• combustion products – chimney;
• furnace walls and openings – heat transfer;
• combustion system – burner and gas train.

A mass and energy balance, including a measurement period, will establish energy consumption per unit of production. Critical measuring parameters will subsequently help assess heat loss, including the furnace pressure, wall temperature, condition of the insulation and refractory, and burner modulation capability.

Measures for generating up to 30% savings

• It is possible to generate 30% savings by regulating the combustion system in a way that limits excess air, preheats combustion air or increases burner modulation.
• It is also possible to generate 30% savings by recovering and using the heat in combustion products to preheat combustion air or ventilation air, or to preheat a fluid.
• Fitting sensors to regulate the furnace temperature, or improving the insulation or refractory will generate up to 10% savings.

Direct purchase customers have had to deliver the molecule to Dawn since November 1, 2016. However, this does not mean that the acquisition of the molecule needs to be carried out directly at Dawn, since the purchase may be made freely from any supply point, such as Empress, from the moment the molecule is delivered and transported to Dawn. Thus, customers may continue to acquire the molecule at Empress and transport it to Dawn, or acquire the molecule at any other point and transport it to Dawn through an existing pipeline or future pipeline.

The Nexus pipeline developer has taken steps with Énergir to carry natural gas along DTE and Vector pipelines from Kensington, Ohio to Willow Run, Minnesota, and subsequently to its final destination at Dawn. If you would like more information regarding this pipeline and the possibility of using this method of transportation, please contact:

Erika Young, Spectra Energy
713 627-4609
edyoung@spectraenergy.com

On November 1, 2016, Énergir finished moving its supply structure from Alberta to Ontario. Effective that date, the commodity price at the delivery point became the supply service reference price at Dawn, while the transportation price would in the future reflect the cost of bringing the commodity to a franchised site from the same point.

These changes were reflected in the value of Énergir’s inventories. Thus, the value of the transportation inventory dropped while the value of supply inventories increased. This inventory revaluation translates into an amount to be recovered (transportation) and remitted (supply) over the next 12 months. The net result of this revaluation appears on the line “Inventory-related adjustments (Price fluctuations and costs incurred to maintain inventories)” of your bill. The inventory adjustment tariff is essentially based on your winter consumption profile – thus, the higher your heating consumption, the more you will be affected by the revaluation.