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Eastern gas shippers protest TransCanada mainline changes

CALGARY — Eastern gas distributors are crying foul over service changes proposed by TransCanada Corp. to its cross-country natural gas mainline that would limit shippers’ ability to renew delivery contracts, as the pipeline and power giant looks to switch portions of the long-haul system to carry oil.

TransCanada has begun soliciting shipper support to convert one of six tubes that comprise the mainline pipeline to oil service. The so-called Energy East project could move up to 850,000 barrels of western crude a day to Montreal and Quebec City refineries by 2017, and on to Irving Oil Ltd.’s plant in New Brunswick by 2018, TransCanada has said.

In March, the company told would-be shippers to expect less room on the 14,000-kilometre system for gas molecules in future as a result of the switch. Now, it wants to strip existing users of their ability to renew one-year delivery contracts on short notice, arguing longer-term commitments are needed to plan for new infrastructure development, including the oil conversion.

The change, proposed in filings made with the National Energy Board last week, is meant to ensure “we don’t get in a situation where [natural gas shippers] essentially tie up capacity just for one year and prevent it being made available for oil service for the remaining 29 years or whatever the oil business signs up for,” Stephen Clark, TransCanada’s senior vice-president, Canadian and Eastern U.S. gas pipelines, said in an interview Monday.

The move marks the start of another round in the bitter fight over the future of TransCanada’s ailing mainline. Round 1 wrapped up in March in a landmark case that ended with the NEB freezing long-distance tolls on the system at $1.42 per gigajoule for five years.

That decision came after tolls spiked on falling Alberta-to-Ontario shipments thanks to a rise in short-term delivery contracts underpinned by new production from shale gas basins located closer to consumers in eastern markets.

TransCanada has asked the board the revisit the outcome, proposing instead a 10¢ hike to the Alberta-to-Ontario toll, to $1.52 a gigajoule. Shippers currently pay $1.89 per gigajoule under an interim toll, Mr. Clark said.

With a review of that request still up in the air, TransCanada’s is effectively “putting the cart before the horse,” said Andrea Stass, a spokeswoman for Union Gas Ltd., which delivers natural gas to 1.4-million Ontario households and businesses.

The move to limit shippers’ ability to renew contracts “preempts the decision of the board and also the opportunity of those affected to protect their rights through a fair process,” she said.

Alberta Northeast Gas Ltd., a New England distributor, has likewise urged the energy regulator to either reject TransCanada’s proposal or subject it to review. Montreal-based Gaz Metro has also raised objections.

Under the existing regime, TransCanada said it may have to add incremental capacity that may be necessary for only one year, or else miss an opportunity to meet new service requests. “Neither of these outcomes would contribute to the efficient development of energy infrastructure, the rationalization of the system, or the public interest,” it told the board.

The Energy East project is in high demand as an Atlantic outlet for Alberta bitumen, with some of the sector’s biggest players, including oil sands giant Suncor Energy Inc., pledging support.

Mr. Clark said TransCanada needs “some certainty around how people want to use the system” as it tries to adapt a half-century old asset to a new competitive landscape.

“It’s not something that’s specific to the oil conversion,” he said. “It’s an important consideration, but it also applies to gas expansions as well.”

Why Amarin Is Struggling So Much

By Brian L. Wilson:

“Don’t fight the tape”

-Wall Street Maxim

Amarin (NASDAQ: AMRN), which was initially a very profitable covered call trade for me, has been seeing extremely weak trading in the last week. I actually exited my position in the stock for an overall ~5% loss earlier this month to allocate the capital into another trade (dodging most of the downside out of sheer luck), although I’ve continued to watch Amarin closely from the sidelines.

The trend is clearly strong, and down once again. It also seems that the bears are especially encouraged now that AMRN is at fresh 52-week lows (and dropping).

Why is Amarin getting crushed with such great performance in the broader market?

For one, I want to point out that Amarin (and many other biotech & small pharma stocks) tend to trade within their own little bubble, which means that AMRN traders are not worried about


Complete Story »

Cyprus Bailout Prompts Muted Relief in Markets

(LONDON) — The rally in stock markets in the wake of the Cypriot bailout deal proved short-lived Monday as investors remained cautious following a crisis that laid bare the scale of problems surrounding Europe‘s single currency. In the immediate aftermath of the deal between the Mediterranean island nation and international creditors, stocks rallied strongly and the euro edged back up above the $1.30 mark. But as the day wore on, the optimism was running dry. Though Cyprus’ bailout deal will prevent it becoming the first country to ditch the euro, investor worries over Europe’s common currency remain, not least because the deal sanctions raiding bank deposits. (MORE: Cyprus Rescue: The Destruction of a Tax Haven) “The Cypriot bailout has a powerful legacy which may alter the security with which depositors elsewhere in the eurozone view the safety of banks,” said Jane Foley, an analyst at Rabobank International. “It has also reportedly uncovered a lack of harmony.” In Europe, the FTSE 100 index of leading British shares was up 0.2 percent at 6,403 while Germany’s DAX rose 0.1 percent to 7,916. The CAC-40 in France was down 0.2 percent at 3,761. Italy’s FTSE-MIB was the big underperformer, trading 1.5 percent lower, as political parties there still struggled to form a government. On Wall Street, the Dow Jones industrial average was down 0.2 percent at 14,481 while the broader S&P 500 index was flat at 1,557. The focus will likely remain on developments surrounding Cyprus for a while yet. In particular, investors will be interested to see if the level of bank withdrawals from the country’s banks when they reopen. That’s scheduled for Tuesday. A longer-lasting concern is how the Cyprus deal plays out in other countries, notably those at the forefront of Europe’s debt crisis. Will depositors look to reduce their holdings in Spain, Italy and Greece? “It will set an unsettling precedent for future bailouts and investors will once again be concerned over the security of their bank deposits,” said Mike McCudden, head of derivatives at Interactive Investor. In return for