PanCanadian enters Alberta electricity market

PanCanadian Petroleum, best known for its oil and gas businesses, announced Wednesday that the first of its Alberta power plants – the Cavalier power station – has received its commissioning certificate and is now selling electricity to the Alberta Power Pool. The Company also announced today that the National Energy Board has approved its electricity export permit, allowing PanCanadian to export electricity into the United States.

The Cavalier plant will be managed by PanCanadian Energy Services, the company’s gas and power marketing division. In order to supply power as quickly as possible into the expanding Calgary and southern Alberta markets, the plant has started operating on a simple cycle basis, producing 85 MW. The second stage of operations will be a combined cycle operation involving both gas and steam turbines, which, will produce an additional 20 MW of power by the end of the year.

Construction of the Cavalier Power Station started in the autumn of 2000. The plant, 100 per cent owned and operated by PanCanadian, is located 55 km east of Calgary.

“This is a very exciting day for PanCanadian because it marks the first time we have produced and sold electricity commercially in Alberta,” said Nancy Laird, Senior Vice President Marketing & Midstream. “In a very short time, we have been able to successfully expand our suite of energy products and services and extend the value chain of our natural gas operations by officially entering the Alberta power generation business.”

When running at capacity, the plant will consume about 20 million cubic feet of natural gas per day. The plant is designed using very efficient natural gas-fired turbines to minimize the impact to the environment.

In addition to the Cavalier Power Station, PanCanadian is building two other plants. The company is building another power station with Nexen Inc. on the site of their Balzac natural gas plant, located five km north of Calgary. This plant, which will be operated by Nexen, will be operational by December of this year. PanCanadian and Nexen each have a 50 per cent interest in the Balzac Power Station.

PanCanadian is also developing an 85 MW cogeneration project in Medicine Hat, Alberta at the Canadian Fertilizers Limited (CFL) Medicine Hat Nitrogen Complex. The cogeneration facility will provide steam under long-term contract to CFL and additional power to the southern Alberta grid.

Alberta’s deregulated electricity market has helped to encourage additional new generation such as those planned by PanCanadian. Various companies including EPCOR, TransAlta, AES Calgary, Fording and Enmax have announced new generation projects in Alberta The new, competitive system enables the market to be more responsive to changes in supply and demand by allowing anyone to build new generation, not just the utilities.

New generation of about 1400 MW was added to the Alberta power supply between 1998 and the end of 2000. An additional 5000 MW of new power has been announced by industry for development between by 2006.

If these projects proceed within the time frame, approximately 600 MW of this new electricity generation is expected to come on line this year. The Alberta government hopes that this increased supply will push prices downward.

At present, installed capacity exceeds 10 000 MW, however, all that capacity is not continuously available to meet the demand. This winter’s current peak demand is reported by the Power Pool to be 7785 MW – up from 7408 MW in 1999. Of the installed capacity, there is currently over 9300 MW available to the Alberta System, including capacity that may be available from US imports.

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