| CALGARY, Alberta, Sept 30
CALGARY, Alberta, Sept 30 Shippers on
TransCanada Corp's natural gas Mainline system are not
signing up to a 42 percent cut on 10-year contracts because they
think the toll is still too high for such a long-term
commitment, according to two sources.
Calgary-based TransCanada is offering tolls as low as 82
Canadian cents per gigajoule on its western Canadian Mainline, a
substantial cut from the current shipping price of around C$1.41
a gigajoule to go from Alberta and British Columbia to markets
However, the new toll would depend on enough customers
signing on to ship at least two petajoules of natural gas.
Two sources familiar with the matter in Calgary said
shippers were not convinced by the deal on offer and were asking
for a lower rate.
Mainline shippers include Canadian Natural Resources Ltd
and Encana Corp. Neither company responded to
a request for comment, although in late August analysts at RBC
Capital Markets, citing discussions with management, said in a
note Canadian Natural regarded the rate as "too high to provide
the comfort needed in connection with a longer-term agreement."
TransCanada said last month it was hoping to launch an open
season in September to formally gauge appetite in the new
tolling system, but would need to see sufficient interest from
shippers before going ahead with that.
TransCanada spokesman Mark Cooper said on Friday that talks
with shippers were continuing.
"We have met with our customers and we have heard them. We
are going to continue to look at ways to ensure Western Canadian
producers can retain and enhance market share in Eastern
Canada," he said.
TransCanada's current settlement in place with Mainline
shippers expires in 2020 and the company is eager to lock new
contracts in place, while Western Canadian natural gas producers
need of lower tolls to help compete with U.S. shale producers.
While Canada's remote Montney and Duvernay gas plays have
comparable production costs to Eastern U.S. shale basins like
the Marcellus and Utica, the greater distance to market
increases delivery costs and the price of Canadian gas in
(Editing by Matthew Lewis)