NOVA Inventory Transfer (NIT): An Overview

April 4, 2011

The Market for Gas

NOVA Inventory Transfer (NIT) is the engine behind one of the largest and most liquid natural gas trading hubs in North America. NIT is operated by TransCanada.

“NIT is a Western Canada Sedimentary Basin (WCSB) gas-trading hub for Alberta System customers,” says Steve Clark, Vice-President, Commercial West, Canadian and Eastern U.S. Pipelines. “Working together with the Alberta System, NIT is connected, efficient, offers great value and is positioned for growth.”

Volumes traded at NIT are now typically over six times the amount of physical flow.

Clark says NIT provides TransCanada customers and other market participants with “unmatched price transparency, supply reliability and trading liquidity and direct access to transactions of more than 60 billion cubic feet per day (Bcf/d)”.

Terminology

The terms AECO Hub, NIT and Alberta Hub increasingly are being used interchangeably to refer to the Alberta gas price and the Alberta pricing point. Pricing is determined at NIT, a notional location on the Alberta System.

How NIT Works

Natural gas is transported from the “wellhead” or natural gas processing plant through the Alberta System to physical markets within and outside western Canada. Producers may sell the gas at the following points:

  • the wellhead
  • the plant gate (outlet of a gas processing plant)/Alberta System receipt point
  • within the NIT commercial hub
  • at a storage facility
  • at the inlet to a local distribution system called the city gate, or
  • directly to the end consumer.

Customers access NIT in the following ways:

  • paying a receipt toll to get into the Alberta System
  • paying a delivery toll to leave the Alberta System; or
  • creating a NIT account for trading purposes

While the gas is on the system, it can be bought and sold as many times as needed. NIT transactions are free. The point of origin is immaterial - as soon as a customer’s gas crosses the flange at the meter station it can trade at NIT.

Commercial West - Managing the Alberta Hub

The Commercial West team is responsible for commercial management of the Alberta System (also known as the NOVA Gas Transmission Limited [NGTL]) and the Foothills System.  

“TransCanada’s Commercial West team has earned a solid reputation for its expertise in connecting gas supply to markets,” says Steve Clark, Vice-President, Commercial West, Canadian and Eastern U.S. Pipelines.

“It builds and maintains strong customer relationships to drive TransCanada’s natural gas pipelines business forward in Western Canada.”

The team works with natural gas producers, marketers, industrial consumers and Local Distribution Companies (LDC’s) to gather and transmit natural gas from abundant supply sources in the Western Canada Sedimentary Basin (WCSB). The gas goes to Alberta markets and to export markets through interconnecting pipelines, including the Canadian Mainline, the Northern Border pipeline and the Gas Transmission Northwest (GTN) system.

Commercial West collaborates with customers through the Tolls, Tariff, Facilities and Procedures (TTFP) Committee to address ongoing opportunities and challenges facing the industry.

Summary

NIT acts much like a bank, where large quantities of natural gas are bought and sold. From NIT, natural gas is purchased for local or export markets that are physically served by export pipelines located at the B.C., Saskatchewan, or Montana border to local industrial markets, or to a low-pressure local distribution pipeline systems.

 “The Alberta System and NOVA Inventory Transfer (NIT) are connected, efficient and positioned for growth,” Clark says. “Together they offer significant advantages to customers by leveraging infrastructure in-place to move growing volumes of Northeast B.C. shale gas and potential future Northern gas supplies to key markets.”