Frequently Asked Questions (FAQ)
|
Here are recent questions and answers about aspects of the HGI project: Q. How much natural gas is available? Aren't we going to run out of gas in the near future? A. It is correct that natural gas is not a renewable resource and that the supply is limited. However, the resource base is quite large and it is unlikely that we will run out of gas in the foreseeable future. For more information, visit the Natural Gas Information and Educational Resources Site (http://www.naturalgas.org) and click on the "Supply of Natural Gas" link. Q. How much will my taxes go up because of natural gas coming to my area? A. Sorry, but we cannot answer that question until the feasibility analysis is complete. We are hoping that stage of the project will be done by the fall of 2002. Q. When will councils have to start putting money in their budgets to pay for the cost of gas installation? A. The HGI timetable calls for construction to begin in early-2003. Councils should probably consider including money in their 2003 budgets. Q. How much will the HGI project cost? A. The cost of the project will be available upon completion of the feasibility analysis in the fall of 2002. Q. Is natural gas still competitive? A. Natural gas prices were quite high during the winter of 2000-2001. There are a number of factors that contributed to this situation. Since that time, the price of natural gas has dropped substantially. Centra Gas has reduced its rates accordingly so that natural gas retains its position as the most economical source of energy for homes and business in the Heartland region. Check our links page for sites that provide information on natural gas prices, supply and demand. Q. In other natural gas expansion projects there were minimum sign-up requirements. Will there be one in the Heartland project? A. Paid sign-ups are the tangible evidence of an area’s level of interest in natural gas service. Achieving a certain level of paid sign-ups is important to a project’s success and having it approved by the Manitoba Public Utilities Board. In past natural gas expansion projects, communities had to achieve minimum residential sign-up requirements of between 40% - 60% before they could qualify for natural gas service. More recently, Centra, working with communities, has established more achievable conversion targets for both residential and commercial conversions, as well as commercial consumption volumes, and then works to sign up customers accordingly. These targets are set based on recent experience in other communities and current market conditions. Customer conversion targets have not been set for the Heartland project yet. Centra will work with HGI to tailor goals that are reasonable for the region, support a feasible project and are consistent with other expansion projects in the Province. Q. In the past, Manitoba Hydro and Centra were competitors. How are natural gas expansion projects viewed by Manitoba Hydro now? A. As the province's full-service energy provider, Manitoba Hydro is committed to pursuing the expansion of natural gas service where economically feasible. In addition, Manitoba Hydro will continue to promote the benefits of using natural gas to Manitobans who live in areas that already receive natural gas service. Manitoba Hydro has committed staff resources to support regional initiatives to expand natural gas service to their areas. Currently, coordinators are assigned to the West Central and Heartland Gas projects. As well, Manitoba Hydro continues to work with individual municipalities and interested customers to examine the feasibility of smaller natural gas expansions in other areas of the province. Q. What influences the price of natural gas? A. Natural gas is a “commodity” that is bought and sold at various locations in North America. As with all commodities, the price is affected by supply and demand. Factors that affect demand include:
Factors that affect supply include:
Natural gas prices, like most commodities, are cyclical in nature. Until a couple of years ago, there was a relative degree of stability in the market place. Supplies were fairly static, the demand for natural gas was reasonably constant, and drilling kept pace with market place requirements. In recent years, the strengthening North American economy brought an increased demand for energy. Electrical utilities, looking for a cleaner-burning fuel that meet the more stringent environmental standards being implemented, began turning to natural gas to generate power. This increased demand put pressure on supply, resulting in higher prices. Higher prices stimulate drilling activity and will eventually result in increased production, bringing supply and demand back into balance. In addition to longer-term cycles, natural gas prices also demonstrate seasonal price cycles within each year - traditionally higher in winter and summer, and lower in spring and fall. Although, given the new demand for gas during the summer months to serve cooling loads, this trend is becoming less prevalent. Last winter, a combination of factors sent natural gas prices spiraling upward. These included lower than normal storage levels of natural gas going into winter, an early onset of very cold weather throughout the U.S. Eastern and Mid-Western states, a booming economy and new demand from electrical generating stations using natural gas fired turbines. In contrast, factors are very different this year as we head into the winter heating season. Weather conditions this past summer were moderate allowing natural gas purchasers to replenish storage levels. There is slowing economic growth and we are experiencing warmer than normal late fall weather. As a result, natural gas prices have declined and are holding steady. In summary, it is impossible to predict natural gas prices accurately given its many unpredictable-influencing factors such as weather and changing economic conditions. Adapted from an article published in Hydrogram, August 10, 2000, Volume 30, Number 19, “Natural Gas 101, Primary Gas Increase Explained” and from information posted on the Consumers Association of Petroleum Producers’ web site, www.capp.ca.Q. Does Centra make money on the sale of natural gas? A. No. Centra Gas Manitoba Inc. is a local distribution company, or LDC. Last year, Centra distributed approximately 2,016,096 10³m³ (1000 cubic meters) of clean burning, environmentally friendly, natural gas to more than 243,000 customers throughout Manitoba. Centra buys gas on behalf of its customers for distribution to those same customers; there is no markup or profit on the transaction. The cost of natural gas is strictly a pass through cost that receives full approval of the Manitoba Public Utilities Board. Simply put, Centra provides a natural gas distribution service and earns its revenues through distribution, not the sale of natural gas.” Source: “Natural Gas 101, Primary Gas Increase Explained” Hydrogram, August 10, 2000, Volume 30, Number 19Q: How deep are newly constructed natural gas lines installed? A: It depends on the nature and purpose of the line:
|