NEWS FILE PHOTO The city has signed a deal to expand delivery of natural gas after 2023, which is expected to be needed for both private sector growth and a future expansion of the power plant.
cgallant@medicinehatnews.com@CollinGallant
The City of Medicine Hat has signed an agreement that will expand natural gas deliveries to the city limits after 2023 – an effort that utility officials say is needed to accommodate growth of its power plant as well as private industry.
The city utility company already uses high-pressure gas from the regional Nova Gas Transmission pipeline system to fuel its existing power plant and supply customers in winter when demand is high.
But that pipeline system is currently at capacity, and expanding it requires a long-term purchasing commitment.
An initial agreement approved this week at council’s regular meeting would see the city negotiate a 15-year take or pay contract in 2023, when Nova would begin physically expanding the service capacity.
“It commits us to the forward purchase,” said Rochelle Pancoast, general manager of the city’s utility business support office.
“We have what we need today, but the lead time (on getting greater gas supply) is four years, so we need to look into the future of what our needs are.”
Increased demand could come from both the private sector as well as a proposed expansion of the publicly owned power plant, said Pancoast.
The potential expansion is a matter of general growth projections, she said, and not the result of recent decisions to shut in a major portion of city natural gas wells.
Most of the 2,000 wells set for abandonment over the next two years are located outside the city.
“This gives us the ability to accommodate growth,” she said.
The utility’s power plant and generating business, known as Genco, would need a higher volume if a proposal to twin the north-end generating station moves ahead.
The project is already approved by regulators, though city administrators and elected officials say a final go-ahead would hinge on the potential to increasing power sales.
The expansion, which would be known as Unit 17, is also described as a way to lure new industry to the city, which would potentially increase retail gas demand as well.
If approved, the project would take 18 months to construct, meaning an opening day likely no sooner than late 2021. That would leave only one winter at current gas supply before the line is expanded.
Administrators could manage supply by idling the new unit in times of high gas demand.
Any major new power user could be accommodated as well using similar measures, said Pancoast.
