(Reuters) - TransCanada Corp has halted its offer of lower tolls to move natural gas in Canada, a company executive said on Tuesday, closing the door to shippers who balked at prices they have said are still too high.
TransCanada started the so-called open season for its new toll in October, offering more favorable terms for its Canadian Mainline running from western to Canada to southern Ontario after shippers pushed back against its initial proposal.
But bids received did not make up enough volume and the company will not change its terms further, Stephen Clark, TransCanada’s senior vice president of Canadian Natural Gas Pipelines, said in an interview.
“We’ve put down our pencil,” he said, adding it is now up to the shippers to come around to TransCanada’s price structure.
“If they want to put something forward, we would certainly consider it, but as far as we’re concerned, our process is complete.”
Clark declined to discuss details of the bids, but said they fell well short of the 1.5 petajoules of natural gas per day the company had hoped for.
TransCanada had asked shippers to sign up for a 10-year contract and pay between 75 and 82 Canadian cents per gigajoule, depending on volumes.
The company also offered shippers the option to exit the contract after five years, with a two-year notice period. During that notice period tolls would increase to between 83 Canadian cents and C$1.15 per gigajoule, depending on the total length of the contract and volumes.
The option for a shorter term came after shippers pushed back against TransCanada’s initial proposals for a 10-year toll, saying rates were still too high for such a long-term commitment.
At present, it costs roughly C$1.41 a gigajoule to ship natural gas from western Canada to the Dawn hub in Ontario.
Reporting by Ethan Lou in New York and Vishaka George in Bengaluru; Editing by Martina D'Couto and Tom Brown