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Strategy
The Gas Pipelines strategy is developed based on the Company's forecast supply and demand for natural gas.
Supply and Demand for Natural Gas
Robust supply transported to the Chicago market is anticipated as a result of increasing conventional production in the Rocky Mountains, unconventional mid-continent production and new production from Gulf Coast LNG facilities. Surplus gas in Chicago will result in greater deliveries to the Ontario market as traditional exports from Western Canada are expected to decline. The development of oil sands projects in Alberta increases the demand for natural gas, as various extraction and upgrading processes require the use of natural gas; however, growth in this sector may be tempered by alternative energy sources. Over time, the entry of new supply from North Texas, the U.S. Rockies and the Alaska North Slope / Mackenzie Delta as well as LNG are expected to adequately supply the market and provide opportunities for Enbridge to deliver this natural gas to markets.
Alliance Pipeline Recontracting
Transportation agreements on Alliance Pipeline US expire in 2015. Alliance Pipeline US is developing strategies to maximize its competitiveness, post-2015, in light of falling export production from Western Canada and the potential for surplus export pipeline capacity. In the longer term, Alliance is well placed to benefit from incremental volumes from Northern gas.
Vector Pipeline Expansion
The US$0.1 billion construction of two additional compressor stations was completed and put in service in the fourth quarter of 2007. These stations expand the pipeline's capacity from 1 bcf/d to 1.2 bcf/d. Vector secured 10-year firm transportation contracts for the new capacity.