Union Gas continues to grow as a natural gas provider and storage and transmission company. It believes a combination of energy conservation and infrastructure investment is the key to continued success.

Union Gas Ltd., Canada's second-largest natural gas utility company, has been serving communities throughout Ontario since 1911. Today, the company operates two divisions - a natural gas local distribution company and a storage and transmission company.

The company delivers natural gas to approximately 1.25 million residential, commercial and industrial customers in more than 400 communities. Its storage and transmission customers are utility and energy companies throughout Ontario, Quebec and the United States. According to Andrea Stass, public affairs specialist, Union Gas is expanding, in part due to the provincial government's decision to phase out coal-fired generation. This is part of a larger plan to deliver cleaner energy on a reliable basis at competitive prices, she explains.

"Part of that includes the construction of a number of new gas-fired electrical generation plants," Stass says. "We're working to put together proposals for gas infrastructure to service those plants. We've filed an application with the Ontario Energy Board, which has to review any projects or pipelines we construct, to build a pipeline to service a 326-megawatt electrical power generation plant in Thunder Bay."

Between 2006 and 2008, the company plans to make considerable investments in the development of gas infrastructure in Ontario, Stass notes. Included in that effort is a $225 million (U.S.) expansion of the Dawn Hub to Parkway transmission system that brings gas through the Northeast United States into Ontario. This will increase pipe capacity to seven billion cubic feet per day.

"That will give our storage and transmission customers in eastern Canada and the Northeast United States the ability to ship more natural gas from the Dawn Hub to their market areas," she says. On the residential side, she says, the company is growing at the rate of 30,000 new customers per year. This is the result of new homes, new businesses and customers who convert from another source of energy to natural gas.

Global Issues
On a global scale, Stass says, energy issues have become an "economic and political global imperative." Disruptions in production on the Gulf Coast as a result of 2005 hurricanes, as well as continued unrest in the Middle East, have significant energy implications, she explains.

Closer to home, she notes "it's estimated that two-thirds of Ontario's generating capacity needs to be replaced over the next 15 to 20 years. Despite these factors, consumers should be able to still rely on providers and government for safe, reliable power," Stass emphasizes. "We believe a combination of energy conservation, investment in infrastructure, and a regulatory framework that encourages investment has to be part of our energy solution. Union Gas runs a program designed to encourage energy conservation. We paid $3 million [Canadian] to customers in incentives last year and spent $1 million [Canadian] in outreach.

"We see energy conservation as one side of it," she continues. "We also need to invest in natural gas infrastructure to support electrical and natural gas systems."

Competitive Advantages
Although the company has no direct competitors in its distribution business, it does compete with providers of alternative energy sources. With natural gas prices rising, some customers are looking at other forms of energy, Stass says.

"We work very hard to educate consumers on the value of natural gas as a reliable, clean, safe form of energy," she says. "It's still 40 percent cheaper to heat with natural gas vs. electricity."  E+P