Pipeline Profiles: Alliance

Pipeline system and key points

Updated February 2018

The Alliance Pipeline owned by Alliance Pipeline Limited Partnership began operations in 2000. It is unique among major Canadian natural gas pipelines because natural gas liquids may be left in the natural gas stream. Alliance transports liquids-rich natural gas to the Chicago market hub. Extraction of the natural gas liquids occurs at the Aux Sable facility located near Chicago.

The pipeline system draws from 59 receipt points, largely concentrated near the northern end of the system in northeastern B.C. and northwestern Alberta. The Alliance Pipeline continues through Saskatchewan and connects to the Alliance USA Pipeline at the Canada-U.S. border near Elmore, Saskatchewan.

Official Board documents related to the construction, operation and maintenance of the Alliance pipeline can be found here: Alliance pipeline regulatory documents. [Folder 90699]

Alliance Pipeline map

Throughput and capacityFootnote 1

Updated quarterly

 

Open data can be freely used and shared by anyone for any purpose. The data for these graphs are available.

Tolls

Updated February 2018

A toll is the price charged by a pipeline company for transportation and other services. Tolls allow pipeline companies to safely operate and maintain pipelines. Tolls also provide funds for companies to recover capital (the money used to build the pipeline), pay debts, and provide a return to investors. The interactive graph below shows the tolls for key paths on the pipeline since 2006.

 

Alliance began operations in 2000, supported by 15-year firm transportation contracts. In 2014 Alliance applied for Board approval of new services and tolls on the pipeline. In 2015 the Board approved the firm tolls and new services, and granted Alliance discretion in setting bid floors for seasonal firm service between 100% and 125% of the applicable 5-Year firm toll, and up to 125%, for interruptible service. By the time the new services were implemented on December 1, 2015, the pipeline was fully contracted under the proposed toll framework, which includes market based rates.

Shippers pay lower term-differentiated tolls if they contract for service for a longer period of time and tolls are charged by zone. Zone 1 includes all receipt points downstream of the Blueberry Hill Compressor Station near Gordondale, Alberta. Zone 2 includes the Blueberry Hill Compressor Station and all receipt points upstream of that station. Alliance also has a notional point known as the Alliance Trading Pool (ATP) where natural gas can be traded. Shippers have the option of contracting for service to or from the ATP only, or using the traditional full path service.

Under the new toll regime, firm tolls decreased about 35% on 1 December 2015. However, shippers must pay for interruptible service if they want to move additional natural gas. Previously the tariff included an authorized overrun service under which the firm shippers could move up to 10% more natural gas at no additional cost other than fuel when capacity was available.

Official Board documents related to the traffic, tolls and tariffs for the Alliance pipeline can be found here: Alliance pipeline toll documents. [Folder 285030]

Abandonment funding

Updated May 2018

The Board requires all pipelines to set aside funds to safely cease operation of a pipeline at the end of its useful life. In 2016, Alliance Pipeline Ltd. estimated it would cost $365 million to do this. These funds will be collected over 40 years and are being set aside in a trust. Official Board documents related to abandonment funding can be found here, sorted by year and by company: abandonment funding documents. [Folder 3300366]

Pipeline financial information

Updated March 2018

Alliance Pipeline Limited Partnership (APL) earned a return on equity of 11.26% in each of the first 15 years since operations began. Return on equity was based on an approved baseline rate of 12.0% with an adjustment for cost overruns during construction. In December 2015, APL began operating under its NSO, and reports achieved return on equity in annual compliance filings to the Board. In 2016 it earned 26.2%. In addition, it is required to file other information with the Board on a quarterly basis. Previously, APL was exempted from filing quarterly surveillance reports with the Board.

Pipeline companies report important financial information to the Board quarterly or annually. A strong financial position enables companies to maintain their pipeline systems, attract capital to build new infrastructure, and meet the market’s evolving needs. The data in this table comes from Alliance quarterly filings with the Board. [Folder 2931363]

Table 1: Alliance Pipeline financial data
  2012 2013 2014 2015 2016 2017
Deemed equity ratio 30% 30% 30% 30% 40% 40%
Achieved return on equity 11.26% 11.26% 11.26% 11.26% 26.2% 31.4%
Total revenue (millions)         $519 $560
Rate base (millions)       $1 342 $1 303 $1 228

Corporate financial information

Updated February 2018

Alliance Pipeline is owned by Alliance Pipeline Limited Partnership, which is a 50/50 partnership between Enbridge Income Fund (rated BBB (high)) and Pembina Pipeline Corporation. In 2016, Alliance Pipeline accounted for 4% of Enbridge Inc.’s earnings.

Credit ratings and financial ratios provide an idea of the financial strength of a company, including its ability to attract capital to build new infrastructure and meet financial obligations. DBRS discontinued its rating of Alliance in 2015 at the request of the company. Moody’s downgraded Alliance’s rating in 2015 based largely on shorter contracts and weaker shipper quality, noting at the time that significant progress in re-contracting the pipeline led them to change the outlook to stable. The financial ratios provided below were calculated by DBRS.

Table 2: Alliance Pipeline Limited Partnership financial ratios and credit ratings
  2012 2013 2014 2015 2016 2017
Interest and Fixed-Charges Coverage Ratio (DBRS) 2.29 2.41 2.58 2.75 Not rated
Cash Flow-to-Total Debt and Equivalents Ratio (DBRS) 18.5% 21.2% 22.3% 27.4% Not rated
DBRS Credit Rating A (low) A (low) A (low) BBB Not rated
Moody’s Credit Rating

Baa1

Baa1 Baa2 Baa3

Baa3

Baa3

Financial regulatory audits

Updated February 2018

The Board audits pipeline companies to confirm compliance with the National Energy Board Act, regulations, Board orders and Board decisions. Financial regulatory audits focus on toll and tariff matters such as detecting cross-subsidies. Alliance’s last audit was completed in March 2009. Official Board documents related to Alliance’s financial regulatory audits can be found here: [Folder 571483]

 

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