NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

GH-5-94 GH-6-94 - Volume 11 Index for all transcripts / Indice des transcriptions d'audiences Index for this transcript / Indice de la présente transcription d'audience previous volume précédent next volume suivant

NATIONAL ENERGY BOARD

OFFICE NATIONAL DE L'ÉNERGIE

Order No. GH-5-94 GH-6-94

Ordonnance No GH-5-94 GH-6-94

Westcoast Energy Inc.

Fort St. John Expansion Project/Grizzly Valley Expansion Project

Hearing held at Audience tenue à

Vancouver, British Columbia

23 February 1995 23 février 1995

Volume 11

© Her Majesty the Queen in Right of Canada 2000 © Sa Majesté du Chef du Canada 2000

as represented by the National Energy Board représentée par l 'Office national de l'énergie

1 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

This publication is the recorded verbatim transcript and, as Cette publication est un compte rendu textuel des such, is taped and transcribed in either of the official délibérations et, en tant que tel, est enregistrée et transcrite languages, depending on the languages spoken by the dans l'une ou l'autre des deux langues officielles, compte tenu participant at the public hearing. de la langue utilitisée par le participant à l'audience publique.

Printed in Canada Imprimé au Canada

For convenience of the reader, this transcript has been Pour la commodité du lecteur, l’Office national de l’énergie a reproduced by the National Energy Board for electronic reproduit cette transcription en vue de sa distribution distribution. The official copy of the transcript is available for électronique. On peut consulter la copie officielle de la viewing through the National Energy Board library. transcription à la bibliothèque de l’Office national de l’énergie.

ORDER NO. GH-5-94

IN THE MATTER OF the National Energy Board Act and the Regulations made thereunder (respectively the "Act" and the "Regulations"); and

IN THE MATTER OF an Application by Westcoast Energy Inc. ("Westcoast") for a Certificate of Public Convenience and Necessity pursuant to Section 52 of the Act authorizing the construction and operation of certain additional facilities; and

IN THE MATTER OF an Application by Westcoast for an Order pursuant to Section 58 of the Act to exempt certain facilities from the the provisions of Sections 30, 31, 33 and 47 of the Act; and

IN THE MATTER OF an Application by Westcoast for an Order pursuant to Part IV of the Act concerning the toll methodology applicable to the facilities applied for herein

2 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

- - -

Hearing held at Vancouver, British Columbia on Thursday, 23 February, 1995

- - -

A. Côté-Verhaaf Chairman

K.W. Vollman Member

R. Illing Member

II

APPEARANCES

J.L. Lutes ) Westcoast Energy Inc. R. Sirett )

R. Dickson BCYT Building and Construction Trades Council; IBEW (Local 213)

C. D'Silva B.C. Health Services Ltd.

S. Torrence B.C. Horticultural Coalition

B. Rogers B.C. Provincial Council of Carpenters

C. McCool B.C. Public Interest Advocacy Centre

W. Sawchuk Chetwynd Environmental Society

D. Bursey COFI, Methanex Corporation and Cominco Ltd.

F. Weisberg ) Export Users Group M.M. Moseley )

S. Hartnell Peace Country Agricultural Protection Association

A. Johnstone Northern Environmental Patriots

R. O'Brien United Association of Journeymen & Apprentices of the Plumbing and Pipefitting Industry of the U.S. and Canada (Local 170)

3 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

A.S. Hollingworth Aitken Creek Group

C.B. Johnson ) BC Gas Utility Ltd. S. Richards )

III

APPEARANCES (Continued)

R. Beattie CanWest Gas Supply Inc.

S.R. Miller Petro-Canada

D.A. Holgate Tumbler Ridge Shippers Group A.R. Fraser Amoco Canada R.R. Moore Imperial Oil Resources C.B. Woods Mobil Oil Canada C. Hart Pan-Canadian Petroleum R. Vandergrift Phillips Petroleum F. Basham Talisman Energy Inc.

G. Hardcastle Unocal Canada Limited

P. McCunn-Miller Alberta Department of Energy

D. Sanderson) B.C. Ministry of Energy, J. Pelrine ) Mines and Petroleum Resources

J. Yardley Peace River Regional District

B. de Jonge) Board Counsel J. Hanebury)

IV

INDEX

PAGE

G.R. Staple: Resumed P.L. Tubb: Resumed J.L. Peverett: Resumed R.B. Maas: Resumed 1897

Cr-ex by Mr. Johnson (Continued)...... 1897 Cr-ex by Mr. Beattie ...... 2006 Cr-ex by Mr. Miller ...... 2033

4 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

V

EXHIBITS

PAGE NO. B-52: WEI Responses to Undertakings given at T.702, T.1402, T.1413, T.1624 and 1626...... 1896

NO. B-53: WEI Response to COFI/Cominco/Methanex I.R. No. 36...... 1897

NO. C-17-28: Appendix I from NEB Reasons for Decision of January 1979 re WTCL, being a map headed: "Gas Transmission Facilities, Gas Trunk Line of British Columbia Ltd. and Westcoast Transmission Co. Ltd...... 1946

NO. C-17-29: 1993 Annual Report of Westcoast Energy Inc...... 1963

NO. C-17-30: Williams Field Services Ad from Calgary Herald of November 26, 1994 ...... 1999

NO. C-17-31: Opening Statement of P.D. Lloyd, on behalf of BC Gas Utility Ltd...... 2005

NO. C-2-13: NEB letter dated 17 February 1995 addressed to Michael E. Coppock, BCYT-BCTC re WEI Pine River Plant and Grizzly Pipeline System Expansion...... 2074

VI

UNDERTAKINGS

PAGE

To provide further detail re impact of additional facilities on LPSF Tolls. 2050

To identify the six areas and portions of the process to which costs are assigned on Process Block Diagram, Figure 6-1. 2057

5 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

To provide the calculations and cost assumptions behind the conclusion that it is better to re-inject C3 and C4 than to produce commercial spec propane and butane. 2063

| --- Upon commencing at 8:30 a.m. | | THE CHAIRMAN: Good morning, ladies and | gentlemen. Mr. Lutes...? | | MR. LUTES: Good morning, Madam Chair. | I have a couple of filings to make this morning. | | The first one is Responses to | Undertakings given at Transcript 702, 1402, 1413, | 1624 and 1626. | | THE CLERK: That will be Exhibit Number | B-52. | --- EXHIBIT NO. B-52: | WEI Responses to Undertakings given at | T.702, T.1402, T.1413, T.1624 and 1626. | | MR. LUTES: And the second one is the | Response to Information Request Number 36 from | COFI. | | I should just note that this is | "Request No. 36", and you can see Request Number 36 | in the upper right-hand corner. However, the | Request and the Response have the number "35" | behind them. So if you could just change that to | "36", you will get the right reference. | | THE CLERK: That will be Exhibit Number | B-53. | --- EXHIBIT NO. B-53: | WEI Response to COFI/Cominco/Methanex | I.R. No. 36. | | MR. LUTES: Thank you, Madam Chair. | That is all the preliminaries. | | THE CHAIRMAN: Are there any other | preliminary matters? | --- (No Response) | G.R. Staple: Resumed | P.L. Tubb: Resumed | J.L. Peverett: Resumed | R.B. Maas: Resumed | THE CHAIRMAN: Mr. Johnson, please. | | MR. JOHNSON: Good morning. |

6 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

|

| | | CROSS-EXAMINATION BY MR. JOHNSON, on behalf of BC | Gas Utility Ltd., (Continued): | Q. In various answers you have | given -- I suppose this is probably for you, Mr. | Maas, but any others as well -- you have expressed | the view that if the facilities are built by | Westcoast, the tolls associated with the new | facilities will be fully absorbed by the producers. | | Have I got it generally correct? | | MR. MAAS: Well, it is the producers | who have contracted for the service that would be | paying the tolls associated with the service. | | Q. Let's put it the other way: | Westcoast has put out various statements -- in the | Press and elsewhere -- that the downstream | customers will not pay any of the costs or any of | the tolls associated with the new facilities, or | words to that effect --- | MR. MAAS: The point we have made is | that the cost of gas to the consumer, the total | cost that say a customer of BC Gas pays, and the | cost that BC Gas in total pays for its gas is | determined by market forces and not by the tolls | that Westcoast charges. | | Q. And you have suggested that it | follows from that that if Westcoast tolls go up, | the increase in the tolls is absorbed by the | producing sector. | | Is that what you are suggesting? | | MR. MAAS: It may or may not. It, of | course, depends on the market. To the extent that | the market conditions are such that gas prices go | up, it could be argued that the purchasers of the | gas are absorbing some extra tolls. To the extent | the price of the gas goes down, it could be argued | that the producers are absorbing more tolls. | | Again, we believe that the price of gas | is set in the marketplace, not with reference to | Westcoast tolls. | | Q. So I take from what you are saying | now, Mr. Maas, that it is not a black and white | proposition, at least as you see it. The costs or | a portion of the costs may be absorbed by the | ultimate consumer, or a portion of the costs may be | absorbed by the producers?

7 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | MR. MAAS: The consumers will pay what | the market for gas is. | | Q. Right. And the market for gas can | be influenced by the cost of production, can it not | -- the market price? | | MR. MAAS: It can be in a broad overall | sense. But the market is a competitive market, and | as we have seen, and as Mr. Staple has testified to | over the past three years the price of gas has | swung over 300 percent, and during that same time | period Westcoast's tolls had been flat. So you | cannot, I think, derive from that that somehow | Westcoast's tolls have influenced the price of gas | in a direct sense. | | Q. But costs of production will have | an ultimate influence on the market price? Is that | not a generally accepted economic theory? | | MR. MAAS: I do not think they have a | direct influence. Again, the market will be what | the market is. Certainly producers and others go | into a proposition of purchasing land rights, | drilling for oil and gas, developing those reserves | and selling them with the expectation of making a | profit based on their forecasts of the costs | involved and the price at which they can sell it. | But in the end, those forecasts may be wrong and | the profit they make or the loss they incur will | probably be different from what they forecast on a | going-in basis. | | Q. To the extent that any increase in | Westcoast's tolls is absorbed by producers, that | would reduce provincial royalties. | | Do you agree with that? | | MR. MAAS: Well, the royalties are set | relative to both the price in the market and the | costs. So if the price did not change and | Westcoast tolls went up, that would I think reduce | the royalty paid, yes. But to the extent the price | goes up, the royalty may in fact go up. | | Q. And in these market dynamics that | you are --- | MR. MAAS: I would also point out, of | course, that if the gas is not produced, there will | be no royalty paid. And clearly what we have | before the Board here is an Application to build a | new plant which will increase the production | capability of the Province and, thus in our view, | will increase the royalties.

8 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | Q. But at the same time what you are | proposing here is to increase the processing tolls | for everyone, not just the producers that are | involved or have signed expansion contracts. | | MR. MAAS: Yes. We believe that it is | appropriate and fair that these tolls be calculated | on a rolled-in basis. | | Q. Right. And that has the effect of | charging all of the producers in the Province a | higher toll if the producer is the one that is | initially paying the toll. | | MR. MAAS: That is correct. | | Q. In this broad market discussion you | were talking about, pipeline constraints will play | a part in how perfect the market is. | | Will you agree with that? | | MR. MAAS: Yes. If you are referring | to the ability at any point where a market exists | to obtain gas from various sources, that will have | an influence. | | Q. And if, to use the example you | used, Mr. Maas, the market price does not change | and Westcoast tolls increase and that means a lower | net back to the producers, the producers might | decide to not produce? | | MR. MAAS: That is a decision they can | consider at any time, yes. | | Q. And low prices can result in that | sort of a decision? | | MR. MAAS: Certainly very low prices | can. I think we have heard over the past several | months that with the very low spot prices over the | winter, some producers have shut-in production. | But generally speaking, I think that most | production will continue to flow. | | Q. I would just like to explore for a | minute if there would be any differences if a group | of producers were to build the Aitken Creek Plant | or a similar plant instead of Westcoast building | that plant. | | If the producers were to build the | processing plant instead of Westcoast, then, once | the plant was built, from the producer's | perspective, the costs would be what are referred

9 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| to as "sunk costs". | | Will you agree with that -- at least | all the capital costs? | | MR. MAAS: Yes. | | Q. Whereas if Westcoast builds the | plant, the tolls associated with processing have to | be paid monthly by whoever is using the plant? | | MR. MAAS: Well, I think it is | equivalent to a sunk cost, in the sense that they | sign, in this case, a ten-year agreement. They are | committed to paying those tolls over ten years. | | So it is equivalent to paying a sunk | cost by constructing the facilities oneself. | | Indeed, one may construct the | facilities, and would, probably, through a | financing and would have to pay that financing off | over time. So I think it comes to the same. | | Q. That is so with respect to the | producers who have requested new capacity. But by | rolling in the tolls, you have increased the | processing tolls for all the persons who contract | for service within the Province. Correct? Or not | within the Province, but all persons who contract | with Westcoast for processing service. | | MR. MAAS: To the extent our processing | tolls go up, that will affect all parties who | contract for those services -- which, by and large, | are producers. | | Q. Right. So if a group of 25 | producers, such as the producers who have signed | contracts with you, had come forward and had built | their own plant, those 25 producers would be facing | what I referred to as "sunk costs". But by you | building the plant, you have caused all of the | producers who make use of your facilities to face | higher prospective costs. | | Is that not so? | | MR. MAAS: Well, in this particular | instance the processing tolls are going up. So in | that sense their costs are going up. The tolls | they pay are going up. The gathering tolls are | going down. The raw gas transmission tolls are | going down. | | So all producers will be paying -- or | all shippers. They are not all producers, because

10 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| there are other parties such as aggregators who | contract for those services. Those tolls will be | going down. | | Q. Let's just pause there for a | second, Mr. Maas. | | The evidence earlier in this proceeding | was that the view of Westcoast was that the | Milligan/Peejay Loops and the Tommy Lake Loop would | have to be built in any event, whether or not the | Aitken Creek Processing Plant went forward. | | Do you understand that to be the | evidence? | | MR. TUBB: I think, more accurately, | when we included those loops in the Outlooks, Mr. | Johnson, they were included as a proxy for some | additional capital that would be required, even in | the absence of the New Aitken Creek Plant; new | capital in the gathering system. | | Those specific loops may not be | precisely what is required. | | Q. Well, we will let the words in | Exhibit B-19 speak for themselves later on. | | Mr. Maas, following up on what Mr. Tubb | said, the fact is that any economies that might be | gained in installing some new gathering facilities, | gathering pipelines, and upping your capacity, that | will happen whether or not you build the New Aitken | Creek Plant? | | MR. MAAS: I do not think so, in the | sense you have put it. Certainly to the extent we | need some more gathering capacity, whether or not | we build this plant, I think what we would have to | look at, because we have designed this on an | integrated basis, is whether such things as the | Aitken Creek Loop, the Milligan/Peejay Loops, as | designed, are in fact the facilities that would be | required -- and I am not saying they would not be, | but the length, the diameters of those pipes, | whether any other piping change would have to be | made. We would have to reassess what would be | required -- because, again, we have designed this | to optimize our raw gas transmission and processing | system in the Fort St. John area on a total basis. | | Q. Let's just go back to processing | for a moment, then. | | If a group of producers were to build a | new processing plant, they would have committed

11 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| their money. They have no choice; they have to | make the payments. | | Now, you say: "Well, to the extent | that people sign ten-year contracts, they are | committed for ten years." Correct? | | MR. MAAS: That is correct. | | Q. But at the end of ten years, they | are no longer committed. | | MR. MAAS: That is correct. But our | view is that with the gas that still remains to be | discovered in the Fort St. John area, there will be | either those producers or other producers who will | be signing raw gas transmission processing | agreements with Westcoast to continue the use of | those facilities. | | Q. I have heard you say that before. | I am just trying to explore the differences between | if producers build it or you build it. | | You will agree with me, will you not, | that at least at the end of the ten years, if you | build it, the producers are looking at monthly | tolls they have to pay; and if the producers have | built it, all they are looking at is an incremental | operating cost to run the place, which is much less | than your monthly tolls. | | MR. MAAS: Well, a considerable | component of our tolls, and presumably a | considerable ongoing component of their costs, | would be the financing costs, the carrying costs. | So I think in that respect it is not simply | operating costs in the sense of traditional O&M. | | If you look at the breakdown of our | cost of service, O&M accounts for perhaps one-third | of the total. | | Q. And the costs of Westcoast are | costs which can be avoided. If you have built the | plant, the producer can say "I don't want to pay | Westcoast tolls in the future. The economics are | not good any more if I have to pay that toll, so I | am not going to drill any more." | Whereas if the producers build the | plant, when they do their economic analysis, all | they see in ongoing expenses is the operating | expense. | | I am suggesting it is quite a different | outlook that the producer would have at that point. |

12 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| MR. MAAS: Well, I am not saying its | economic outlook would necessarily be exactly the | same. But, again, McMahon Plant has been around | for 37 years and we have not had contracts for 37- | year terms, and it continues to operate and, of | course, has been expanded on several occasions. We | are now contemplating here a further expansion. | And we anticipate that that will go on for many, | many more years. |

| | | Q. If the producers own the plant | themselves, will you agree with me there will be a | large incentive on them to find gas and keep that | particular plant operating? | | MR. MAAS: Certainly they would have | that incentive -- but I think they have that | incentive now. We have Northeast British Columbia | relatively unexplored. The producing community | within North America sees it as very attractive, | and that is the reason the gas supply picture has | increased significantly over the past several | years, and we believe will continue. So that | incentive is there. They do not need to build | their own plant to have that incentive. | | Q. If the producers were to build the | new processing facilities, would you expect the | price of natural gas at Sumas to be any different | than if Westcoast built the facilities, the | processing facilities? | | MR. MAAS: No, I would not expect it to | be different. | | Q. In your Direct Evidence, Mr. Maas, | you made reference to gas moving from the Fort | Nelson Plant to the Village of Fort Nelson, to the | distribution system owned by BC Gas. | | MR. MAAS: Yes. | | Q. And I think you indicated that --- | MR. MAAS: I am not sure I made -- I | would have to check it, but the gas that serves the | Village of Fort Nelson comes out of the Mainline, | not out of the plant. | | Q. That is just what I was going to | explore with you for a moment. You said "it came | out of the mainline". You meant the Transmission | North Mainline? | | MR. MAAS: That is correct, yes.

13 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | Q. Can you just be a little more | specific. I think you said it went through a meter | station -- and I am afraid I do not have it in | front of me. No. 44, or something like that. | | MR. MAAS: Station No. 43, I believe, | yes. | | Q. Whatever it is -- it does not | matter. So the gas goes through the processing | plant? | | MR. MAAS: Yes. | | Q. Goes through a meter and goes into | the Transmission North pipeline, you say? | | MR. MAAS: Yes. The tap for the Town | of Fort Nelson is off of the mainline. | | Q. And is it before the compressor | station, or after? | | MR. MAAS: There is not a compressor | station at the Fort Nelson Plant that is on the T- | North -- that is, the Transportation North side of | the plant. There is a booster station at the inlet | of the plant. | | Q. Right. And --- | MR. MAAS: So it follows, of course, | that in that sense it is after. | | Q. The booster station is at the inlet | of the plant, so the gas --- | MR. MAAS: Some of the gas goes through | the booster station -- other gas does not -- into | the plant; it is processed. It then goes into the | Transmission North Mainline. It travels south in | there, and some of that gas comes out of the | Mainline and serves the Town of Fort Nelson. | | Q. And how far does it go from the | Fort Nelson Processing Plant before it diverts off | to the Village of Fort Nelson. | | MR. MAAS: Oh, it is quite close. It | is not very far. | | Q. What do you mean by "quite | close" -- ten yards? | | MR. MAAS: Perhaps a couple of hundred | yards. It may be less. I do not think it would be | any more than that. But it is transmission --- | Q. And I think you indicated, or

14 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| suggested, that the tolls for the gas that is going | to the Village of Fort Nelson have -- I was not | sure whether you were saying that you had some | component of Transmission North in the toll. | | MR. MAAS: Yes, we have -- and Mr. Tubb | could explain this better than I could, and I | certainly welcome him to correct me if I do not do | this right. | | We have an off-line toll which is used | for certain service in the North, and a component | of that toll is the Transmission North short-haul | toll. | | Q. Maybe I will ask Mr. Tubb about | this, then. | | Mr. Tubb, my understanding is that that | off-line toll is basically just a negotiated toll. | It does not relate directly to any specific costs | of Westcoast. | | MR. TUBB: No. The gathering and | processing components of that toll are a pre- | determined contribution to those particular | services. | | Q. Yes. | | MR. TUBB: But the demand portion of | that toll is adjusted every year, and it is equal | to the Transportation North short-haul rate. | | Q. One other question -- going back to | you, Mr. Maas. | | You also talked about Fort St. John and | referred to the NGL Plant and I think the | electrical generating facility, that is partially | owned by Westcoast and also the Village of Fort St. | John, the gas going to those. | | MR. MAAS: To the City of Fort St. | John. There is also, of course, the City of | Taylor, and there is the Fibreco Plant. Those are | all taps off of the transmission system. | | Q. Dealing with those, the NGL Plant, | for gas, does it go off the Transmission Mainline? | | MR. MAAS: Yes, it does. | | Q. And how far does it go from the | processing plant before it goes to the NGL Plant? | | MR. MAAS: It is quite close.

15 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | Q. Ten feet? | | MR. MAAS: More than ten feet, but | certainly it is in the same vicinity. It is off | the transmission system. | | Q. It is in the -- as we discussed | yesterday, I believe, it is in the same industrial | site. | | MR. MAAS: Yes, it is. | | Q. And the City of Fort St. John, how | far does the gas go through the Transmission North | Mainline before it diverts off to the City of Fort | St. John? | | MR. MAAS: I do not know the exact | distance -- but again, it is probably in the order | of 200 metres; perhaps a bit more than that. | | Q. Okay. And the Village of Taylor, | would it be the same sort of distance? | | MR. MAAS: Yes. There are two taps for | Taylor. There is one on the south side of the | river and one on the north side of the river. The | one on the south would be perhaps two kilometres. | | Q. The Fibreco Pulp Mill...? | | MR. MAAS: Again, a couple of hundred | metres, perhaps; that order of magnitude. Perhaps | a bit more than that; up to half a kilometre. | | Q. And I think you mentioned the | electric generating facility. | | MR. MAAS: They are all in the same | general area, with the exception of the South | Taylor tap, which is on the south side of the | river. | | Q. The electric generating facility is | in the same industrial site as the processing | plant? | | MR. MAAS: It is the same general | industrial site, that is correct. | | The Fibreco Plant is further away, not | on the same site. | | Q. A few hundred metres further on. | | MR. MAAS: The Fibreco Plant is perhaps

16 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| a kilometre away. | | Q. But the tap is a few hundred | metres. | | MR. MAAS: The tap is fairly close. | | Q. Thank you. | | One question that was left from Panel | 1, and that I indicated earlier I would ask you: | Gas that goes into the Westcoast system, or has | gone into the Westcoast system, that only needed | the extraction of water --- | There has been some of that, has there | not? | | MR. MAAS: Yes, there are dry gas -- | so-called -- dry gas sources that go into the | mainline. | | Q. They do not go through any | Westcoast processing, or through what would be | called a processing plant of any other party? | | MR. MAAS: The dry gas source would go | through a dehydration plant. If it was a sour gas | source, of course it would go through a treatment | plant. | | Q. Can you give me, very broadly, what | proportion of the gas that goes into the Westcoast | system would be this dry gas? | | MR. MAAS: Very small. | | Q. And that goes right into the | Transmission North Mainline, does it? | | MR. MAAS: Yes. I think the taps for | dry gas would generally be off of the 16-inch | Boundary Lake Line. They may be, as well, off of | the 26-inch Alberta Trunk Line. | | Q. Thank you. | | I had asked a question to Mr. | Thorneycroft on Panel 1, and he referred it to you, | which was whether or not any of the raw gas that | moves through the gathering pipelines owned by | Westcoast is owned by Westcoast Energy Inc. or | owned by companies affiliated with Westcoast. | | MR. MAAS: I would not think any of it | was owned by Westcoast Energy Inc., but I believe | Westcoast Gas Services does have a gathering | contract.

17 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | Maybe Mr. Tubb can confirm that. | | MR. TUBB: Westcoast Gas Services is a | shipper on the system. I cannot recall | specifically whether they have a gathering contract | or not. I believe they probably do. | | Q. That is fine. | | MR. MAAS: We have another subsidiary | which may have been amalgamated into Westcoast Gas | Services -- I am not sure -- which did have a | contract as well. | | Q. Who was that? | | MR. MAAS: I just do not recall the | name of it. It was essentially providing gas | supply for the NGL Plant. I cannot think of the | name of it at the moment. | | Q. That is fine. | | A question that was left -- I think for | you, Mr. Tubb -- at page 893 of the Transcript: | The pipeline that connects the Existing Aitken | Creek Plant and goes over to Compressor Station N4 | -- there are two lines there -- are the costs | associated with those lines included in the costs | of Zone 2? | | MR. TUBB: No, they are not. | | Q. Back to you for a second, Mr. Maas. | Who is it that provides the shrinkage gas for the | NGL Plant? | | MR. MAAS: That is provided by both -- | of course, Westcoast Energy, at the moment, is | still one of the joint owners; Petro-Canada is the | other. Each provides its own share, and the share | for Westcoast Energy is provided by I think at | least two producers. | | Q. And it would be those producers | that would have the contracts for gathering and | processing and Transmission North, if required? | | MR. MAAS: They may. But I think there | was another contract which was originally held by | Westcoast Petroleum -- which is of course now | Numac. I think that may have gotten assigned to | another Westcoast subsidiary. | | Q. I think you mentioned -- and I just | wanted to make sure it was clear -- that at the

18 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Existing Aitken Creek plant, the personnel that | operate that Plant are employees of Unocal Canada. | | Is that what I understood? | | MR. MAAS: Yes, they are. The plant is | operated under a contract between Westcoast and | Unocal. The overall management is still | Westcoast's responsibility. Unocal provides the | operators. | | Q. And are there any other of the | processing plants owned by Westcoast Energy Inc. | which at the present time are operated by someone | else? | | MR. MAAS: No, they are all operated by | Westcoast. We contract for certain services, but | the operation is by Westcoast. | | Q. Just moving on, then, Mr. Maas: | Westcoast is unique among National Energy Board | regulated gas pipeline companies in respect of its | degree of involvement in the upstream areas of the | gas industry; that is, gathering and processing? | | MR. MAAS: Yes, I think that is a fair | statement. | | Q. The other gas pipelines regulated | by the National Energy Board are limited to | Mainline transmission? | | MR. MAAS: That is my understanding. | | Q. And the gathering pipelines of | Westcoast, they extend right up to, and into, | producers' fields? | | MR. MAAS: Yes. Typically our lines, | as I think I mentioned before, tend to be | relatively large-diameter lines. I think the | average diameter is between 12 and 16 inches, with | lines up to 26 inches in diameter. | | So they tend to be trunk raw gas | transmission or gathering, with compression, and | they extend into the fields, and then the producers | bring the gas to various central points where it is | metered and then transferred into the Westcoast | gathering system. | | Q. And other NEB-regulated gas | pipeline companies do not extend their | operations -- generally do not extend their | operations right into producers' fields, do they? |

19 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| MR. MAAS: They may pass through | producer fields. The Foothills Line, for example, | in Alberta --- | Q. But they generally would --- | MR. MAAS: -- and Southern | Saskatchewan, where they --- | Q. I am sorry, I do not want to | interrupt you. | | They would either generally start at a | processing plant, take gas from a processing plant, | or connect with a line that brings gas from a | processing plant? | | MR. MAAS: Well, typically they connect | at the Alberta border, with the exception of | Foothills. And of course within Alberta, the NOVA | System connects through laterals to the outlets of | producer processing plants. | | Q. For the purpose of planning its | facilities, it is important for Westcoast to know | the areas from which gas production will be coming? |

| | | MR. MAAS: Yes. | | Q. And that is not just production | today, but also the location of expected future gas | production? | | MR. MAAS: Yes. We have a Gas Supply | Division in Calgary that assesses the Western | Canada Sedimentary Basin, in particular that area | in Northeast B.C. and adjacent areas of Alberta and | the Territories. | | Q. You are quite interested in keeping | up with the status of exploration activity in | Northeastern British Columbia? | | MR. MAAS: We are, yes. | | Q. When Westcoast undertakes its Gas | Supply Outlook -- such as that which I could find | in the Five Year System Development Outlook -- | Westcoast looks at gas reserves and future | deliverability in various areas of the Province? | | MR. MAAS: The Province and adjacent | areas, yes. | | Q. And you have to know where gas will | be produced in the future in order to plan your | gathering pipelines and processing facilities, to

20 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| plan for the location of those? | | MR. MAAS: Well, our objective is to | optimally develop our system. Again, it is a trunk | gathering system. It is not the producer wellhead- | related facilities, which are generally very small | in diameter. | | We want to have a broad view of where | gas is going to be developed, where it is being | developed, potential volumes, so that, when we do | put in our raw gas transmission lines, we can, | where reasonable, plan for the future and put in a | size of line which, over its life, will be the most | economic size. | | Q. You are not planning to move the | Transmission North Mainline, so you extend out the | gathering pipelines to new areas of production? | | MR. MAAS: I did not quite understand | the first part of your question. | | Q. You are not planning to move your | Transmission North Mainline, are you? So what you | do to go to the new areas is you just put gathering | lines into the new areas? | | MR. MAAS: Yes, typically -- although, | again, we look at the economics of the entire | situation to determine what we would do. | | Q. And on the processing side, to use | the Aitken Creek Plant, the Proposed Aitken Creek | Plant as an example, you have to look around and | try and decide where production is going to come | from to site the plant in the optimal location. | | MR. MAAS: It would be our desire of | course, as I have said, to optimize that whole | system, and, yes, therefore we would try to choose | a site which, in our view of where gas is going to | be developed, would put it in more or less an | optimal position, subject to other constraints on | where it may be sited. | | Q. And if I understand it correctly, | the Provincial Government decides which areas of | the Province will be made available for natural gas | development? | | MR. MAAS: They do. But they | certainly, I believe in that regard, get input from | producers, explorers who express interest in | particular areas, and suggest to the B.C. | Government where they may hold land sales. |

21 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Q. That is my understanding as well, | Mr. Maas. | | Information is gained, but the | Provincial Government then decides which land will | be posted for exploration? | | MR. MAAS: Ultimately, they have that | decision-making capability. | | Q. If the Provincial Government were | to decide tomorrow that no new exploration were | going to be allowed in the Fort St. John area, then | the feasibility of the Proposed Aitken Creek Plant | would be affected very significantly? | | MR. MAAS: It would, yes. | | Q. And would it be fair to say that | that would kill the project? | | MR. MAAS: Well, I think that is a | hypothetical. I suppose it would -- but I do not | expect that is going to occur. | | Q. Ultimately, the Province can have | the final say as to whether or not Westcoast | constructs gathering pipelines by deciding which | geographic areas will be made available for natural | gas exploration. | | Would you agree with that? | | MR. MAAS: Certainly where gas is | explored for, which is, in part, determined by the | Provincial Government. But, again, I think it is | largely driven by the producers. Producers will | affect where new gas is found and where new | facilities are required. | | Q. And that would be both gathering | facilities and processing facilities? | | MR. MAAS: Yes. | | Q. And there are discussions in the | Province, and in particular in the Northeast part | of the Province, about land use. Isn't that so? | There are some ongoing discussions? | | MR. MAAS: Well, I think that is | throughout the Province, yes; Protected Area | Strategy, a Policy development of the British | Columbia Government. | | Q. Right. And is Westcoast involved | in those discussions?

22 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | MR. MAAS: Yes. We have members at | certain of the Task Groups. | | Q. And the question of the development | and exploitation of natural resources is part of | these land use discussions that are ongoing? | | MR. MAAS: That is one of the factors | they consider, yes. | | Q. And one of the major natural | resources in the Northeast region of the Province | is natural gas? | | MR. MAAS: That is correct. | | Q. So, ultimately, the Province, | through this land-use process that is ongoing, will | have a large say in -- and perhaps restrict | areas -- where gas exploration would be allowed or | where it would be limited? | | MR. MAAS: Well, yes. When you say | "large say", I think it is the Government's intent | that the input and consensus is developed in the | particular regions that are affected. | | Q. I was not suggesting otherwise. | But I guess they have the ultimate say; they make | the ultimate decision as to what land uses are | going to be allowed in various areas? | | MR. MAAS: That is correct. | | Q. And this land-use development or | land-use planning in the Northeast of the Province, | that is of interest and concern to Westcoast, is | it? | | MR. MAAS: I think it is of interest to | all members of the community, including the | business community in both the oil and gas | industry, the forest industry; other industries. | | Q. And including Westcoast...? | | MR. MAAS: Yes. | | Q. Because it can play a large part in | the development of the natural gas industry in the | Province? | | MR. MAAS: It certainly can influence | it, yes. | | Q. And a large part in the gathering

23 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| and processing activities of Westcoast? | | MR. MAAS: To the extent opportunities | for gas exploration are either encouraged or | hindered, yes. | | Q. There are also environmental issues | that are coming up or are more prominent now in | terms of oil and gas exploration than they have | been in the past? | | MR. MAAS: I think that is a fair | statement, yes. | | Q. And included in environmental | issues are environmental concerns regarding | processing as well. | | Do you agree with that? | | MR. MAAS: Well, I do not know that | there is anything new there in terms of processing. | The Government sets, for example, as I noted | earlier, limits on the amount of sulphur compounds | that can be emitted to the air environment. | | So air issues, water and waste issues | as well. | | I mean, that has always been there. | There is nothing new there in that regard. | | Q. And those are referred to in your | Written Evidence, B-24, at the bottom of page 3 and | over to page 4? | | MR. MAAS: That is correct. | | Q. And those are Provincial | Environmental Regulations, are they? | | MR. MAAS: There are Provincial | Regulations. With respect to waterways, the | Department of Fisheries and Oceans is also | involved. So we also deal with those people. | | Q. The air emissions you were | referring to, those were provincial? | | MR. MAAS: Yes. | | Q. In the material we referred to | earlier about the thermal oxidizer at McMahon, and | a new one was being installed because of noise | concerns, is that a Provincial Regulation -- the | noise levels? |

24 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| MR. MAAS: This is probably something | you should have asked our Environmental Panel. I | am not sure it is a Regulation or a General | Guideline, but there were issues with respect to | low-frequency vibrations from the thermal oxidizer. | | Q. Is that a Provincial Guideline or | Regulation, whatever it happens to be? | | MR. MAAS: I am not sure where they | take the Guideline from. It may be a Federal | Standard. | | Q. The pipeline that is being proposed | to move the condensates from the New Aitken Creek | Plant over to the McMahon Plant, is that going to | be under Provincial Regulation, or Federal | Regulation, or do you know? | | MR. MAAS: I believe the existing line | from the Blueberry Battery down to Taylor is under | Provincial Regulation. I assume if Suncor | Federated or Solex built a line up to the New | Aitken Creek Plant, I expect that would probably be | under Provincial Regulation. | | Q. Can we change subjects, Mr. Maas. | I would like to talk a bit about the history of | Westcoast -- and I will not ask you to look for any | Annual Reports prior to 1957. | | You talk in your Evidence about | Westcoast having been incorporated in 1949, I | believe. It was then Westcoast Transmission | Company Limited, now Westcoast Energy Inc. | | The Special Act which incorporated it | authorized Westcoast to operate interprovincial and | international pipelines. | | Is that correct? That is what you say | in your Evidence. | | MR. MAAS: Yes. | | Q. And Frank McMahon was --- | MR. MAAS: If you look in the actual | Act, it states: | "...interprovincial or international | pipelines for the transmission and | transportation of gas and oil, | including pumping stations, terminals, | storage tanks or reservoirs and all | works relative to thereto for use in | connection with the said pipelines." | Q. I think that is what you said in | your Evidence as well.

25 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | Frank McMahon was the founder of the | Company? | | MR. MAAS: That is correct. | | Q. And he was also involved with | Pacific Petroleums, was he? | | MR. MAAS: He was. | | Q. And Westcoast was established, if I | understand it correctly, to move gas from the | Northeast part of British Columbia down through | British Columbia, serving the Lower Mainland, and | also serving customers before the Lower Mainland, | and also to serve the Pacific Northwest of the | United States. | | MR. MAAS: I think Mr. McMahon's | original vision was to build a pipeline all the way | to California. I do not think he was looking so | much to the Lower Mainland. Indeed, the pipeline | was built largely on the strength of the markets in | the U.S., not the domestic market. | | Q. I was not going to get into that | debate again. | | And it was to move gas from the | Northeast part of the Province, the Fort St. John | area, down to the markets in the South? | | MR. MAAS: That is correct. | | Q. And we can also have Exhibit B-49, | if you would put that in front of yourself. | | MR. MAAS: I have that. | | Q. I am going to deal with the various | items mentioned there. The first was the McMahon | Processing Plant. | | Yesterday you indicated that you had | done some research, and your research indicated | that the McMahon Plant was originally intended to | be built by a producer group. | | Is that what you said? I am afraid I | forgot to look at the Transcript. | | MR. MAAS: Yes. I think the original | plan was that the scrubbing plant would be built by | a producer group. In the end, that did not occur. | The producer group -- in particular, Pacific | Petroleums -- could not raise the capital, and

26 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Westcoast Energy took over the construction of the | scrubbing plant, the McMahon Plant. | | Q. I have lost my photocopy but I was | reading from a book called The Wildcatters. | | MR. MAAS: Yes. It is at page 214. | | Q. Yes. That is where I found it as | well, Mr. Maas. Reading the paragraph there: | To handle the gas produced in the Fort | St. John and nearby fields in | Northeastern B.C., construction was | started in 1956 on a large processing | complex at Taylor Flats, a few miles | south of the Town of Fort St. John. | The complex comprised three basic | units; a plant being built by the | Jefferson Lake Sulphur Company, to | recover up to 600 tonnes of sulphur a | day; a scrubbing plant owned by the | producing companies, which would remove | condensate, propane and butanes from | the gas; and a refinery being built by | Pacific Petroleums to produce gasoline, | aviation fuel and other products from | the liquids supplied by the scrubbing | plant. |

| | | Is that your general understanding of | what was originally envisaged for the Taylor area? | | MR. MAAS: Yes, it was. And of course | the next paragraph goes on to say that they were | hard-pressed to finance the facilities; that the | contracts were renegotiated and Westcoast took over | the scrubbing plant and the fuel gathering line. | | Q. And that was in 1956, I believe? | | MR. MAAS: Yes. And I think I noted | yesterday that we found that the contract was | assigned in January of 1956. | | Q. Thank you. In Exhibit B-49, Item | No. 1, you had attached the Certificate in which, | in 1960, I believe, the National Energy Board | became involved in the regulation of Westcoast | facilities? | | MR. MAAS: Yes. The National Energy | Board Act was not enacted until 1959. So it would | have been difficult for the Board to have been | involved before then.

27 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | Q. Right. And attached to Exhibit | B-49 were a couple of schematic diagrams. | | MR. MAAS: That is correct. | | Q. And the one that is numbered | 2024-M -- that is a schematic of the facilities, a | schematic of the pipeline, the Westcoast line. If | you can look at that for a second, Mr. Maas. | | MR. MAAS: I have that. | | Q. To the right of it, it shows the | pipeline that -- to the far right -- comes from the | U.S. border up to Taylor, and that is all in dark. | That is all a Westcoast facility. And it shows a | mainline, towards the top of the schematic diagram, | that goes over to Alberta, and that was also a | Westcoast facility. | | Correct? | | MR. MAAS: Yes. | | Q. And then to the left of the | diagram, there is another line that says "B.C. Gas | Trunk". | | That was not a Westcoast facility; that | was owned by Gas Trunk Line of British Columbia | Limited? | | MR. MAAS: Certain pipelines were owned | by Westcoast and certain were owned by Gas Trunk. | I think which is which is set out in -- I am not | sure it has been marked as an Exhibit, but in | something you gave me yesterday --- | Q. We will get to that. | | MR. MAAS: -- which shows a map. And, | indeed, the B.C. Trunk, as shown on this diagram, | is not one of those lines which was owned by B.C. | Trunk Lines. It was owned by Westcoast, as far as | I can determine. | | Q. So you are saying the schematic is | wrong, as far as you can determine? | | MR. MAAS: We call it "the B.C. Trunk | Pipeline". But there was also a company called | "Gas Trunk Line of British Columbia", and it was | not the owner of the line out of the plant. It was | owner of part of that line further north. | | I would have to compare diagrams to see | if it is on here or not.

28 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | But certainly where it is labelled | "B.C. Trunk" on this reference we are discussing, | that particular pipeline was owned by Westcoast. | | Q. If we move on in Exhibit B-49, the | next item that is listed on the first page is "the | Fort Nelson Processing Plant". It says there that: | "The construction of the Fort Nelson | Gas Processing Plant was originally | authorized by the National Energy Board | in 1964 ---" | I suggested to you, I think earlier, | that that was not quite correct. | | Did you take a look at that, Mr. Maas? | | MR. MAAS: Well, the construction of | the gas processing plant was authorized by the NEB | in 1964, and we have the Certificate. | | Q. I am referring you to a document -- | I have not made copies of this. It is a National | Energy Board Report to the Governor-in-Council, | dated July 1964, and relates to Westcoast. | | MR. MAAS: Yes. | | Q. I am just giving you an extract. I | will refer to a few pages. I think we can just | read them out, rather than having to copy the whole | thing. | | If you can look at the page that says | "The Application"... | | MR. MAAS: Yes. | | Q. And it states: | "The Applicant's gas supply is | currently obtained from the general | vicinity of Fort St. John, British | Columbia, and the Peace River area of | Alberta." | And then it goes on, in the next paragraph: | "The Applicant now wishes to obtain | access to gas supplies in the Fort | Nelson area of British Columbia, | approximately 200 miles north of Fort | St. John." | And then over the page, page 2, Item (b), it says | that the Applicant is seeking: | "an Order authorizing the Applicant to | acquire the interest of Gas Trunk Line | of British Columbia Ltd., in the pipe | line system now under construction from | Fort Nelson to Chetwynd...including:

29 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| (i) (A) gathering line (of) 9 | miles... | (ii) A processing plant with a | capacity of 200 million cubic feet of | raw gas per day to be located in the | vicinity of Clarke Lake Gas Field... | (iii) (A) Main Pipe Line (of) | approximately 220 miles of 30" O.D. | pipe line." | And then if you go over to page 3, the last | paragraph: | "In dealing with this application, the | Board is faced with a situation that, | at the time of the hearing, about $10 | million worth of construction on the | Fort Nelson project had been carried | out by the Applicant, acting as agent | for Trunk Line. Construction of a 16- | inch Clarke Lake gathering line | included in the application had been | completed. About a fifth of the gas | processing plant had been built." | And I will leave it there, for the moment. | | Can you agree with me that the Fort | Nelson Processing Plant construction was originally | started by Gas Trunk Line of British Columbia, and | only after it was partly constructed did Westcoast | take over the project? | | MR. MAAS: Yes. And I think that is | also dealt with in the book we were referring to, | "The Wildcatters". | | Essentially, Gas Trunk was set up | because Westcoast could not raise the capital, | needed another vehicle. Mr. McMahon needed another | vehicle to finance it, and he set up Gas Trunk to | do that. It was his intention to have Gas Trunk | build those particular facilities -- not because | Westcoast could not build them, but because, at the | time, Gas Trunk appeared to be a better financing | vehicle. | | However, at the end of the day, Gas | Trunk did have difficulty financing and Westcoast | took over the project. | | That is set out in the book, "The | Wildcatters" at pages, roughly, 259 to 260. | | It also notes that Westcoast did | commence construction as agent for Gas Trunk prior | to getting NEB approval. I think part of that was | Mr. McMahon was desperate to get new gas supply | onto the system and, thus, started before we in | fact had the approval, since we were applying

30 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| simultaneously to the National Energy Board at the | same time when construction was started. | | I think, at the time, the Board -- the | book puts it quite mildly -- was quite unhappy with | Mr. McMahon's actions. | | Q. I was going to refer you to that, | Mr. Maas. But before I do, Gas Trunk was regulated | under Provincial Regulation. It was not a | federally-regulated enterprise. | | Is that correct? | | MR. MAAS: That is correct, yes. | | Q. If you can just turn to page 41 of | that extract I gave you... | | MR. MAAS: I am sorry, what page? | | Q. Page 41. It is the | "Disposition" -- the Board's Decision, in effect. | | Paragraph number 1 starts out: | "The Board has given careful | consideration to all the evidence and | all the representations made in respect | of this application. In its | considerations, the Board has had in | mind, particularly, the following | salient circumstances: | (1) Westcoast must obtain additional | supplies of gas not only to supply new | Canadian markets but to protect the | supply for its existing Canadian | markets and authorized exports; this | was pointed out in the Board's 1960 | Report to the Governor-in-Council..." | And then if you look over to page 44, Mr. Maas, in | the paragraph a little over halfway down the page: | "Given that it is essential that the | Applicant have access to the gas | reserves in the Fort Nelson area, it is | necessary to construct some 200 miles | of lines to connect to its system the | Clarke Lake field which, to date, has | the largest known reserves of any field | in the area." | And then it talks about whether or not a 30-inch | line was necessary. | | I just want to see if you would agree | with me -- and I think you will -- that what was | required here was Westcoast needed more gas. | Westcoast, at that time, had contracts for the | delivery of gas. It was in the business of selling

31 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| gas, and what Westcoast needed was more gas? | | MR. MAAS: Well, I think it needed more | gas, not only to service existing markets, but it | needed additional markets to make the economics | work. So it was a combination of needing more gas | and market -- which the Fort Nelson fields provided | the promise of being able to do that. | | Q. If you could go to page 48, | briefly, Mr. Maas, the paragraph at the bottom of | the page -- and I think this is what you were | referring to earlier. The Board says: | "The Board cannot escape the impression | that the Applicant, in setting its | course of action, was consciously..." | MR. MAAS: What page are you on? | | Q. Page 48. | | MR. MAAS: Oh, page 48. | | Q. The last paragraph. | | "The Board cannot escape the impression | that the Applicant, in setting its | course of action, was consciously | circumventing the intent, if not the | letter of the National Energy Board | Act. The Board, nevertheless, must act | upon the public interest, which in this | case requires, in the view of the | Board, that the project go forward." | That is what you were referring to | earlier, I think. | | MR. MAAS: Yes. And I think before the | Application was before the Board, the Board had had | concerns about what was happening. | | I am not trying to justify past actions | of the Company, but B.C. Gas Trunk was a financing | vehicle. In the end, it was in fact owned by | Westcoast itself and Westcoast's major | shareholders. | | So it was really, in a sense, part and | parcel of the same undertaking. | | Q. Then just moving forward in the | history, the next item that is mentioned in B-49 is | in the Response to Question 130, which is about | halfway through, or a third of the way through, | that exhibit, where it notes that in 1972 Westcoast | purchased certain pipeline facilities in the Beaver | River Gas Field from Amoco. |

32 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Those pipeline facilities were not | federally regulated before Westcoast purchased | them. | | Is that correct? | | MR. MAAS: Not that I am aware of. | What Westcoast purchased was essentially the | lateral into the Beaver River Field off of the | Beaver River Pipeline owned by Westcoast. | | Q. And then in 1974, continuing on the | same page: | "In 1974, Westcoast purchased some | gathering pipeline facilities...from | Union Oil ---" | Those, again, were not regulated by the | National Energy Board or federally regulated before | Westcoast purchased them? | | MR. MAAS: Not to my knowledge. | | Q. And then flipping back to the first | page of B-49, the next event noted is "The Pine | River Processing Plant". | | That plant was authorized from Day One | by the National Energy Board? | | MR. MAAS: That is correct. | | Q. Then in 1978, Westcoast applied for | -- and it is not noted, I do not think, in any of | this material. In 1978, Westcoast applied for | Board authority to, in effect, take over Gas Trunk | Line of British Columbia? | | MR. MAAS: To amalgamate the companies, | yes. | | Q. And involved in that, firstly, was | some gathering and processing pipeline -- excuse | me, I think I am reading the wrong document. | | That is a Decision of the Board of | January 1979, Mr. Maas. | | I think I gave that to you yesterday. | | MR. MAAS: Yes, you gave it to me. And | the Board notes in that that really Gas Trunk was | Westcoast; that it had no employees of its own; | that "its directors and officers are all employees | of Westcoast. All the decisions respecting the | management of Gas Trunk and the operation of its | pipelines are made by Westcoast...", et cetera. |

33 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| That is on page 12 of that Decision. | | Q. And as it also notes in the | Decision, the pipeline facilities which were owned | by Gas Trunk were all constructed under authority | of various Certificates of Public Convenience and | Necessity issued pursuant to the Pipelines Act of | British Columbia. |

| | | That is on page 6. | | MR. MAAS: That is correct. | | Q. I thought for convenience, as | opposed to going through it, we might mark the | Appendix out of that Decision, as opposed to | photocopying a lot of stuff. | | The appendix is a map, Mr. Maas. | | MR. MAAS: Yes, I have a copy of that. | | MR. JOHNSON: If that could be marked | as the next Exhibit, please. | | THE CLERK: That will be marked as | Exhibit C-17-28. | --- EXHIBIT C-17-28: | Appendix I from NEB Reasons for | Decision of January 1979 re WTCL, being | a map headed: "Gas Transmission | Facilities, Gas Trunk Line of British | Columbia Ltd. and Westcoast | Transmission Co. Ltd." | MR. JOHNSON: | Q. Exhibit C-17-28 sets out the | facilities of Gas Trunk Line of British Columbia | Ltd. as they were at the time of, or just | immediately prior to, its amalgamation with | Westcoast. | | Is that your understanding, Mr. Maas? | | MR. MAAS: That is correct, yes. | | Q. And included in the facilities | there are gathering lines, which are shown towards | the upper left-hand side of that page, the Nig | Creek Line and Bubbles Line, or whatever they all | were. They are all listed in the decision. | | But, as well as those gathering lines, | there is also the line that goes from Fort St. John | over to Alberta.

34 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | MR. MAAS: It goes in that direction, | yes. | | Q. And that is the line that now goes | over to Gordondale? | | MR. MAAS: No. | | Q. No? | | MR. MAAS: The line going to Gordondale | is the line to the south you see here. | (Indicating). | | The Boundary Lake Line is the 16-inch | line. At the border itself, Westcoast owns about a | mile of pipe straddling the border. It is the so- | called "Sausage Link". | | Q. And that line that goes from Taylor | over to --- | MR. MAAS: When I say "Westcoast | owns"... Now it owns, of course, the whole line. | But at the time that Gas Trunk existed, Gas Trunk | did not go into Alberta. It stopped before the | border, and then Westcoast had a section of line | which crossed the border. | | Q. So at that point in time, just | prior to the amalgamation, you are saying that | Westcoast owned a short piece of residue gas | pipeline that crossed the border; and on the other | side, on the Alberta side, there were Westcoast | (Alberta) facilities? | | MR. MAAS: I think the connection there | was with NOVA. The Westcoast (Alberta) facilities | are down off the 26-inch line, the line to the | south that goes to Gordondale. | | Q. Well, let me just get it straight, | then. We have NOVA facilities coming up close to | the border; we had a mile or so of Westcoast-owned | line crossing the border, and then you had a line | that was owned by Gas Trunk Line of British | Columbia Ltd. that went from close to the border | over to Taylor. | | MR. MAAS: That is correct. And it was | all operated by Westcoast. The Board notes in its | Decision: | "...it is clear that since 1964 any | additions to Gas Trunk facilities have | been made by Westcoast itself, as shown | by the various Orders granted by this | Board."

35 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| So, essentially, Westcoast did all the | work. The issue of Trunk was an issue of | financing. And the Board notes that, as well, on | page 12 of its Decision, where it says: | "It is only when meeting the | requirements of the outstanding long- | term debt of Gas Trunk that Westcoast | employees treat that Company as being a | separate entity from Westcoast." | Q. The Gas Trunk facilities were all | Provincially regulated, or certainly not regulated | by the National Energy Board, prior to the | amalgamation? | | MR. MAAS: Yes. My understanding is | that the certificates to construct those facilities | were issued by the Province. Of course, in those | days, no one was setting tolls as such. They were | really equivalent to Part 3 type approvals for the | construction and operation of facilities, and | Westcoast was buying and selling all of the gas. | | Q. And the facilities all worked quite | properly, even though there was different ownership | of different facilities? | | MR. MAAS: Well, the ownership was on | paper. The operation was all Westcoast. Trunk had | no employees. | | Q. Moving on to the next item in the | chronology, I think the next you have here is in | 1978 -- and this is on the gathering lines: | "In 1978, Westcoast purchased a | pipeline in the Fort St. John area, | known as the Monias pipeline, from Czar | Resources ---" | MR. MAAS: You are in Request G-130? | | MR. JOHNSON: Yes, I am. | | MR. MAAS: Yes, that is correct. | | Q. I have a copy of an NEB Staff | Report prepared by the Economics and Engineering | Branches, National Energy Board, 1979. I would | like to see if you could agree with something that | is in that, Mr. Maas, relating to the Monias | Pipeline. | | I am handing you page 23 out of that | Report. The middle paragraph on that Report refers | to the Monias Pipeline. | | MR. MAAS: Yes. | | Q. The Report is entitled "A Review of

36 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| the Pipeline System of Westcoast Transmission | Company Limited". And it says: | "Where it has not constructed gathering | lines, Westcoast has not allowed | producers to connect to its system. In | the case of the Monias Pipeline, for | example, Westcoast did not connect the | related gathering system until the | producer agreed to sell that system to | Westcoast. Clearly, by enforcing its | monopoly position in this area, | Westcoast is seeking to expand its rate | base as defined in the BCPC agreement | and as may be defined by the Board." | | Is that a correct statement, Mr. Maas, | from your understanding? | | MR. MAAS: I agree that you have read | the words correctly. I have no reason to suggest | that that was not the case. I was not with the | Company at that time. | | I certainly know that now we have | producer gathering lines connected into our | gathering lines. | | Q. That was at the time of the BCPC | Agreement. Was Westcoast taking the position or | interpreting the BCPC Agreement to the effect that | the BCPC Agreement gave Westcoast an exclusive | right to gather and process gas in British | Columbia? | | MR. MAAS: I cannot say. I do not know | that to be a fact. | | Q. Continuing on in B-49 -- and we are | back on the first page, Mr. Maas. | | There is a reference there to 1987, to | the Sikanni Plant -- and I think we have already | discussed that. That one was purchased from | Remington. | | The next one is the Aitken Creek Plant, | which was purchased from Unocal. | | MR. MAAS: Yes. | | Q. And, finally, the Boundary Lake | Processing Plant. We did not touch on that | further. | | The Boundary Lake Plant was one of the | facilities that was owned by Gas Trunk Line of | British Columbia?

37 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | MR. MAAS: That is correct. | | Q. And when the amalgamation occurred | and the Board approved the amalgamation, that is | when Westcoast became the owner of the Boundary | Lake Processing Plant? | | MR. MAAS: That is correct. | | Q. And to sum it up: Of the six | plants that Westcoast owns, it is fair to say, is | it not, that there is only one of those plants -- | being the Pine River Plant -- which has been | regulated by the National Energy Board from Day | One? | | MR. MAAS: Well, it depends how you | define "Day One". Certainly Westcoast built the | McMahon Processing Plant. That was not the | original intention, as we have discussed. But | Westcoast took over that contract in January and | the plant was constructed, commencing in 1956. | | The Fort Nelson Processing Plant: we | have gone through the Board Decision, which | indicates that some construction had been commenced | prior to the Board issuing its Certificate. But, | presumably, the plant was completed under the | Board's Certificate, and the plant has always | operated under the Board's Certificate. | | We talk about Pine River as being there | since Day One. | | The Sikanni Plant was purchased. | | The Aitken Creek Plant was purchased, | but it was purchased not in a condition which | suited Westcoast's purposes, and Westcoast applied | to the Board to purchase that plant and, secondly, | to modify that plant to meet its purposes. | | The Boundary Lake Plant is no longer in | service. | | Q. If you could just turn to page 6 of | your Evidence, Exhibit B-24. At line 6 on page 6, | the question was posed: | "Are the gas processing plants an | integral part of the Westcoast gas | pipeline system?" | And the answer: | "Yes, they are. Under the Service | Agreements between Westcoast and its | shippers, Westcoast receives raw | gas..."

38 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Et cetera. And you go on to say: | "...Westcoast would be unable to | perform the services it is currently | obligated to, and is in fact | performing." | The obligation that you are referring | to there, at lines 13 and 14, Mr. Maas, that is the | obligation that arises from the fact that you have | entered into contracts with various shippers to | process their gas? | | MR. MAAS: That is correct. | | Q. Thank you. And if we turn to page | 7, the top Question and Answer: | "Does Westcoast purchase and sell any | of the gas processed and transported | through its pipeline system?" | And you say: | "With the exception of minor volumes of | gas sold under offline sales agreements | to local distribution utilities...all | gas is..." | Gas of others, in effect. | | Those "minor volumes", those are under | contracts which are long-term contracts which are | nearing their end? | | MR. MAAS: That is correct. At least | one of those is with BC Gas -- and I take it your | people are aware we would be pleased to cancel that | Agreement any time they are willing to do that. | | Q. And under those contracts --- | Those contracts have been, in effect, | assigned to CanWest Gas Supply, and the | negotiations and the discussions flow directly, or | take place directly between the distributor and | CanWest? | | MR. MAAS: CanWest is Westcoast's gas | supplier for those particular obligations. The | obligations are still Westcoast obligations. But, | yes, CanWest does deal directly with the | distributors. | | Q. And supplies all the gas that moves | under those contracts? | | MR. MAAS: Yes. And, of course, when | Westcoast was in the business of buying and selling | gas from the point in time when the BCPC was | formed, and then CanWest took over the BCPC's gas | contracts, we have had our gas supply through that | type of an arrangement. |

39 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Q. Those contracts are just the tag- | end of the merchant function that Westcoast used to | perform? | | MR. MAAS: That is correct. | | Q. Westcoast does not sell any gas | inter-provincially any longer, does it? | | MR. MAAS: No. Of course, with the | deregulation of gas markets, it has been the desire | of the National Energy Board, and the desire of | pipelines under the National Energy Board Act, to | remove themselves from the buying and selling of | gas and to focus on the provision of the | transportation service. | | Q. Moving on to a matter you made | reference to in earlier cross-examination, Mr. | Maas: The purchase of the Buckinghorse Plant from | Rigel, or Rigel and others, by Westcoast Gas | Services Inc., you indicated, I believe -- if I | have the sense of what you were saying -- that the | owners of that plant were interested in selling, | that Westcoast Energy Inc. might have been | interested in buying, but the timetable was such | that there would have been too much of a delay if | Westcoast had become involved? | | MR. MAAS: I think that is reasonably | paraphrasing my comments of earlier. As I have | mentioned, I was not involved in those discussions. | But I understand that there was an issue of timing | and certainty involved. | | Q. And that was because if Westcoast | Energy Inc. was involved in the purchase, it would | have had to apply to the Board for approval of the | purchase? | | MR. MAAS: Yes. Any proposal made to | purchase and operate those facilities would have | required the approval of the Board and, thus, any | agreement we would have struck would have had to | have been conditional on the Board's approval. | | Q. Could I ask you to turn to the BC | Gas Evidence, to Tab 4, the Evidence of Mr. | Petranik. It is following page 17. It is not a | numbered page, but following page 17 there is a | News Release.

| | | Do you have that, Mr. Maas? |

40 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| MR. MAAS: I have that. | | Q. And firstly, this News Release is a | News Release of Westcoast Energy Inc. | | Is that so? It is on Westcoast Energy | letterhead. | | MR. MAAS: It is on our letterhead. | Certainly, it is Corporate Office, and the people | to contact are the President and Chief Executive | Officer of Westcoast Gas Services Inc., and | Patricia Bowles, who is out of the Corporate | Office, the Director of Corporate Communications. | | Q. Of Westcoast Energy Inc. | | MR. MAAS: This is not a Pipeline News | Release. | | Q. It is a Westcoast Energy Inc. News | Release, though. | | MR. MAAS: Well, it has the Westcoast | logo, but the heading says "Westcoast Gas Services | Inc. To Buy Buckinghorse". | | I am not sure anything turns on it. | | Q. No. I just wanted to identify it. | And it goes on to identify Westcoast Gas Services | Inc. as a wholly-owned subsidiary of Westcoast | Energy Inc. And that is so? | | MR. MAAS: That is correct. | | Q. And it goes on in the next | paragraph to say that: | "This represents Westcoast Gas | Services' first entry into the gas | gathering and processing industry to | help complement our gas service | business." | MR. MAAS: Yes. That is a quote from | Michael Stewart, the President and Chief Executive | Officer of Westcoast Gas Services Inc. | | Q. Then it identifies that there was a | competitive bidding process, and it just identifies | what assets were being included in the purchase. | And then it goes on, in the final paragraph, to | say: | "Westcoast Energy Inc. is a major | Canadian corporation in the natural gas | industry. It holds interests in gas | pipelines, processing, underground | storage, distribution and gas marketing

41 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| services. Headquartered in Vancouver, | British Columbia, it manages over C$6 | billion in assets and owns more than | 60,000 km of pipelines serving more | than 1.2 million customers across | Canada." | Now, that 60,000 kilometres of | pipelines, that is not all pipeline regulated by | the National Energy Board, is it? | | MR. MAAS: No. That would include all | of the pipelines of the various distribution | companies that Westcoast owns. | | Q. And most of those 1.2 million | customers would be distribution --- | MR. MAAS: That is correct, yes. | | Q. Is it fair to say, Mr. Maas, that | we are left with a situation where if Westcoast | Energy Inc. had purchased the Buckinghorse | facilities, then Westcoast would have sought to | have those facilities regulated by the National | Energy Board; but if the wholly-owned subsidiary, | Westcoast Gas Services Inc., buys the exact same | facilities, Westcoast does not seek to have them | regulated by the National Energy Board? | | MR. MAAS: Well, I am not sure it is a | question of seeking. Westcoast Gas Services went | out and bought those particular facilities. | Clearly, if BC Gas would like the Board to regulate | those, it would have the opportunity to put that | forward to the Board. | | Q. But from a Westcoast perspective, I | think you have told me that if Westcoast Energy | Inc. had bought the services in the name of | Westcoast Energy Inc., it would have involved the | process of obtaining Board approval, and that would | have delayed things, and that is why you were not | involved? | | MR. MAAS: Well, all of the facilities | of Westcoast Energy Pipeline Division are | facilities regulated by this Board. | | Q. And that is what Westcoast would | have intended to happen if --- | MR. MAAS: If Westcoast Pipeline | Division were the entity within Westcoast acquiring | those assets. | | Q. But it was done through a wholly- | owned subsidiary, and in that circumstance no | application has been made for regulation by the | National Energy Board.

42 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | MR. MAAS: That is correct. | | Q. And I think you said the other day, | Mr. Maas, that you cannot speak to any possible | expansion of the Buckinghorse facilities? | | MR. MAAS: No, I cannot. | | Q. Can you speak to any intentions of | Westcoast Gas Services Inc. to acquire the Boundary | Lake Processing Plant? | | MR. MAAS: I cannot, but I am certainly | not aware of any such intentions. | | Q. Are you aware of any negotiations | to acquire that plant? | | MR. MAAS: No. | | Q. Can you speak to the general plans | of Westcoast Gas Services Inc. in the gathering and | processing operations in British Columbia? | | MR. MAAS: No, I cannot. I am not | involved in their business. They are a subsidiary | which operates independently of the Pipeline | Division of Westcoast Energy. | | Q. Yesterday, Mr. Maas, you talked | about the business of Westcoast. I think you were | talking about Westcoast Energy Inc. | | I would like to just discuss that with | you for a few minutes and ask you to refer to the | 1993 Annual Report. | | I have copies to mark. | | You should not make your Annual Report | so thick, Mr. Maas! | | THE CLERK: That will be Exhibit C-17- | 29. | --- EXHIBIT NO. C-17-29: | 1993 Annual Report of Westcoast | Energy Inc. | | MR. JOHNSON: | Q. And this is the latest Annual | Report, is it, Mr. Maas? | | MR. MAAS: The latest published one. | We have yet to issue the 1994. | | Q. I suspect that when you found the

43 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| 1957 Annual Report, it was not as thick. | | MR. MAAS: No. | | Q. If we can just look at page 3 -- | and I do not think the photocopying on the page | numbers came out too well. But, the Chairman's | Report...? | | MR. MAAS: Yes. | | Q. And in the middle column, the | second-last paragraph: | "With core assets in the raw gas | transmission, processing, | transportation, and distribution of | natural gas, the Company has | established the foundations for strong | growth." | The reference there to "raw gas | transmission", that is a reference to the gathering | pipelines that Westcoast owns. | | I know you prefer to call them raw gas | transmission. | | MR. MAAS: That is correct, yes. | | Q. The "processing" reference on that | page, that is a reference to the processing | facilities, or treatment facilities owned by | Westcoast. | | MR. MAAS: Yes. | | Q. The "transportation", that is a | reference to the Transmission andNorth and | Transmission South Pipelines owned by Westcoast, is | it? | | MR. MAAS: Well, partly. Certainly | Union Gas also has a transmission system. | | Q. Okay. Anything else that would | fall into that category? | | MR. MAAS: Well, I suppose arguably one | might say that PNG's line is a transportation | system partly, and partly a distribution system. | | Q. And then the "distribution", that | involves, as it suggests, local distribution | companies. | | MR. MAAS: Yes. | | Q. For a moment can we divert from

44 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| that. | | The gathering and processing | facilities: I took from the Evidence of Mr. | Edgeworth in the Multi-Pipeline Hearing that at the | end of 1994, of the NEB-regulated assets, 57 | percent of them were gathering and processing | facilities? | | MR. MAAS: Fifty-seven percent on what | basis? | | Q. This is from B-17-22. I will just | read you the paragraph. It is quite short. | | "The proportion of Westcoast rate base | in raw gas transmission and processing | facilities will increase to | approximately 57 percent at the end of | 1994 and 61 percent at the end of | 1995." | MR. MAAS: Yes. So that would be | referring to those facilities regulated by the | Board, those facilities of the Pipeline Division. | They would not include the transportation pipelines | we talked about with respect to Union Gas. | | Q. Yes. That is what I was trying to | say. Of the NEB-regulated facilities, 57 percent | of those were gathering and processing facilities | at the end of 1994. | | MR. MAAS: That is what that statement | says, yes. | | Q. And it is projected that they would | be 61 percent at the end of 1995. | | MR. MAAS: Yes. | | Q. And my understanding is that if the | Aitken Creek project, the facilities that are in | the present Application were approved by the Board, | and if also the Grizzly Valley facilities were | approved by the Board, that percentage would rise | to something above 70 percent at the time of | completion. | | MR. MAAS: I do not know the | percentage, but I would presume it would rise. | | Q. Do you know, Ms. Peverett? I think | I heard 70 percent somewhere along the line. | | MS. PEVERETT: I think 70 percent is | contained in BC Gas' Evidence. I do not dispute | it.

45 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | Q. The distribution facilities and the | Union Gas transportation, and whether or not PNG | has any transportation or transmission, none of | that is regulated by the National Energy Board, is | it? | | MR. MAAS: That is correct. Just one | moment. | --- (A Short Pause) | Q. If you are thinking about St. | Clair --- | MR. MAAS: That is what I was thinking | about. | | Q. Could you turn to page 36 of the | Annual Report --- | MS. PEVERETT: Mr. Johnson, there is | one other very small transmission line owned by | Centra Ontario. It is called Centra Transmission, | and it is regulated by the National Energy Board. | | Q. Thank you. | | MR. MAAS: It goes to the U.S. border, | and there is an extension line beyond that. I had | forgotten about that one. | | Q. I was not aware of that one. | | If you could turn to page 36, Mr. | Maas.... | | MR. MAAS: Of the Annual Report? | | Q. Yes, please. And looking under | "Accounting Principles", "Consolidation". There | are a lot of companies listed there. | | Union Energy Inc. and Union Gas | Limited, those are 100 percent subsidiaries that | are involved in the distribution of natural gas in | Ontario? | | One may be a holding company. | | MR. MAAS: Yes. Again, I am just | puzzled over the two and how they relate. But they | are involved in distribution, as I mentioned. They | also own a transmission system and a storage | system. | | Q. And that transmission system moves | gas that it receives from TransCanada Pipe Lines; | it moves it then through transmission facilities | owned by Union and then re-delivers it to | TransCanada?

46 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | MR. MAAS: I think they connect to | other than the TransCanada system -- but I am not | certain of that. | | Q. It is not that important. | | MR. MAAS: They re-deliver it in the | vicinity of Toronto. | | Q: Westcoast Gas Services Inc., we | have already discussed. As well as owning the | Buckinghorse Processing Plant, it is involved in | the marketing of natural gas? | | MR. MAAS: That is correct. | | Q. St. Clair Pipelines Ltd. is an NEB- | regulated pipeline that moves gas across the U.S.- | Canada border? | | MR. MAAS: Yes. | | Q. Then there are a number of Centra | companies. Those are all involved in the | distribution of natural gas. | | MR. MAAS: That is correct. | | Q. And other than the one you have | mentioned, that there is a federally-regulated | small pipeline there, they are all provincially- | regulated. | | MS. PEVERETT: There is actually | another small transmission company owned by Centra | which is regulated by the FERC. | | Q. Okay. Pacific Northern Gas is a | distributor of natural gas in British Columbia, | that takes gas off the Westcoast system and moves | it out towards Kitimat and Prince Rupert. | | MR. MAAS: That is correct. | | Q. Westcoast Power Inc. Can you just | tell me what that is? | | MR. MAAS: That is a company involved | in mainly cogeneration projects. | | Q. I will skip over the numbered | company. Westcoast Gas Inc. ...? | | MR. MAAS: I believe that is a holding | company. |

47 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Q. Next is Westcoast Transmission | Company (Alberta) Ltd. We have talked about that | before. It owns the facilities on the Alberta side | of the border which connect with facilities owned | by Westcoast Energy Inc. | | MR. MAAS: That is correct. | | Q. And Westcoast Transmission Company | (Alberta) Ltd. is regulated by Alberta provincial | authorities? | | MR. MAAS: It is, as far as facilities | are concerned. Again, it does not have any | employees. Its facilities are operated by | Westcoast Energy employees. In terms of toll | setting, we follow the principles that the Board | decides here in terms of rate of return and so on. | | So you might say, indirectly, the Board | regulates the tolls of Westcoast (Alberta), with | one exception, I believe: we do not use the | depreciation methodology that we use with Westcoast | Energy. |

| | | Q. And that is by agreement with the | shippers on Westcoast (Alberta), is it -- or at | least they do not complain about that? | | MR. MAAS: You will perhaps recall -- I | am not sure how long ago -- that several years back | IPAC raised the issue of whether the Board should | take over the regulation of Westcoast (Alberta). | | I cannot recall what the issue was at | the time, but that seemed to have subsided. And, | as I said, we essentially developed the tolls for | Westcoast (Alberta) in the manner that the Board | approves for Westcoast Energy. | | Q. Westcoast Energy Risk, I assume, is | just an insurance management arrangement, is it? | | MR. MAAS: Yes. | | Q. And then skipping down to the joint | ventures -- and there are only a couple I will ask | you about. | | Pacific Coast Energy Corporation: That | is 50 percent owned by Westcoast along with Alberta | Energy Company, and it moves gas from the Coquitlam | area in British Columbia over to Vancouver Island | and on Vancouver Island?

48 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | MR. MAAS: Yes. And the Sunshine Coast | as well. | | Q. The McMahon Cogeneration Project: | Is that the power generation project that is at the | industrial site at Taylor? | | MR. MAAS: That is correct. | | Q. And that is a 50/50 arrangement | with Consumers Utility --- | MR. MAAS: C.U. Power. | | Q. C.U. Power? | | MR. MAAS: Canadian Utilities. | | Q. And the Fort Nelson Powerline | Project...? | | MR. MAAS: Yes. That is another that | is jointly owned with C.U. Power, or a subsidiary | of C.U. Power. It is a high-voltage transmission | line between Alberta and British Columbia. | | Q. One company that is no longer | listed here but which was listed in earlier Annual | Reports is Westcoast Petroleum Ltd. | | MR. MAAS: Yes. That company was sold. | It now goes under the name of Numac. | | Q. I am just more interested in when | it was owned by Westcoast. | | For a portion of the time that | Westcoast had an interest in that, it was a 100 | percent subsidiary of Westcoast? | | MR. MAAS: That is correct. | | Q. And when it was a 100 percent | subsidiary of Westcoast, it produced natural gas in | British Columbia? | | MR. MAAS: It did. | | Q. And that natural gas that was | produced by Westcoast Petroleum Ltd. moved into the | gathering lines of Westcoast and into processing | facilities of Westcoast, and then into the | Transmission North and Transmission South | facilities? | | MR. MAAS: It did. |

49 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Q. And during that period of time, | Westcoast Petroleum Ltd. was never regulated by the | National Energy Board, was it? | | MR. MAAS: No, it was not. | | Q. Westcoast, the parent, never sought | to have it regulated by the National Energy Board? | | MR. MAAS: That is correct. | | Q. And was that because Westcoast | Petroleum was considered to be part of the | production end of the business? | | MR. MAAS: Well, it was a separate | company. It ran totally independently of what is | now the Pipeline Division of Westcoast Energy. | | Q. Centra Gas British Columbia Inc. is | listed on page 36. Is that the company that owns | the distribution system in Fort St. John? | | MR. MAAS: It is. | | Q. And as you talked about earlier, | the Centra Gas British Columbia Inc. distribution | system connects to the Transmission North Pipeline | of Westcoast in the vicinity of Taylor? | | MR. MAAS: It does. | | Q. And gas that goes through the | gathering and processing facilities of Westcoast | and through the Transmission North Pipeline of | Westcoast goes into the distribution system of | Centra in Fort St. John? | | MR. MAAS: It may -- although the way | things are piped at Taylor, I think, typically, the | actual physical gas that goes into Centra comes out | of Alberta; comes off those lines coming into | Taylor from the east. | | Q. If it comes in from Alberta, it | goes through the Transmission North Pipeline of | Westcoast? | | MR. MAAS: It does. | | Q. At least notionally it comes | through your gathering and processing, | contractually? | | MR. MAAS: Yes -- well, it all depends | where they contract their gas from. |

50 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Q. And that system that is connected | in the Fort St. John area, it is not regulated by | the Board, and Westcoast has never sought to have | it regulated by the National Energy Board? | | MR. MAAS: The Centra facilities? | | Q. The Centra facilities. | | MR. MAAS: That is correct. | | Q. And Centra Gas British Columbia | owns other distribution facilities in British | Columbia, and the gas that moves, or at least a | portion of the gas that moves through those | distribution facilities, also moves through the | gathering, processing and transmission facilities | of Westcoast? | | MR. MAAS: Yes. | | Q. The gathering lines that are owned | by Westcoast in the Fort St. John area, none of | those extend beyond the provincial boundary, do | they? | | MR. MAAS: In the Fort St. John area? | | Q. In the Fort St. John area. | | MR. MAAS: No. Those that are on the | Alberta side of the border are owned by Westcoast | (Alberta), in that particular area. There are | gathering lines in Fort Nelson that extend beyond | the border. | | Q. Leaving the Annual Report, Mr. | Maas --- | MR. MAAS: And I should note that there | are producer lines that enter the Westcoast -- or | at least one producer line enters the Westcoast | Fort St. John Gathering System, and it comes from | Alberta. | | Q. It is owned by a producer? | | MR. MAAS: That is correct. | | MR. JOHNSON: I do not have too much | more, Madam Chairman. I am not sure if you want to | break at this point? Or should I keep going? | | THE CHAIRMAN: Do you have another | quarter of an hour? | | MR. JOHNSON: I would think something | like that. Maybe a bit more -- but not too much

51 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| more than that. | | THE CHAIRMAN: Well, if you prefer that | we take our break now --- | MR. JOHNSON: It doesn't matter to me | one way or the other. | | THE CHAIRMAN: Well, then, please | proceed. | | MR. JOHNSON: Okay. | | Q. Still looking at the history a bit, | or going back into the history a bit, Mr. Maas, | when Westcoast started operations, it started | actually moving gas in 1957, did it? | | MR. MAAS: That is correct. | | Q. And at that time it bought the gas | from producers in the field? | | MR. MAAS: That is correct. | | Q. And then moved it through | Westcoast-owned facilities, and eventually sold the | gas to distribution companies in British Columbia, | or sold it at the border to Northwest Pipeline? | | MR. MAAS: Yes. Or the predecessor of | Northwest Pipeline, in the early days. | | Q. And some gas also came in from | Alberta, some process gas? | | MR. MAAS: Yes. In fact some of the | first gas delivered into the system was the gas | from the Alberta area, the Pouce Coupe area. | | Q. And right from 1957 through until | the early 1970s, at least -- and I will come to | that later -- all of the gas that was moving | through the Westcoast System was owned by | Westcoast? | | MR. MAAS: Yes. | | Q. And that continued right up to the | time of the BCPC Agreement? I am not suggesting it | did not continue afterwards, but at least up until | then? | | MR. MAAS: Yes. | | Q. And then in 1973 the BCPC Agreement | came into place --- | Just before we get to the BCPC

52 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Agreement, Mr. Maas: Up until the BCPC Agreement, | Westcoast made its profit or lost its money on the | difference between the purchase price of the gas | and the sale price of the gas? | | MR. MAAS: That is correct. | | Q. And then in November of 1973, | Westcoast entered into an Agreement with the | British Columbia Petroleum Corporation? | | MR. MAAS: It did. | | Q. And I will just call that the "BCPC | Agreement". And that Agreement changed the | structure of things, in that the producers then | sold their gas to BCPC, which, in turn, sold the | gas to Westcoast? | | MR. MAAS: That is correct. Westcoast | novated its gas purchase agreements with the | producers to the British Columbia Petroleum | Corporation. | | Q. And under the arrangements with | BCPC, Westcoast received a return on its investment | that was set by the BCPC Agreement? | | MR. MAAS: Yes. And my recollection is | that it was with reference to the returns provided | by the National Energy Board. | | Q. And the way it worked is that | Westcoast would take in revenue when it sold gas, | deduct its expenses, adopt the return allowed by | the BCPC Agreement, and remit the rest to BCPC. | | MR. MAAS: That is correct. | | Q. And there were some other | arrangements made for gas that came in from | Alberta. That was considered to be gas going to | the export market. | | MR. MAAS: That is correct. | | Q. And until the BCPC Agreement came | along, the price that Westcoast paid for gas, paid | to producers -- it was negotiated or arbitrated | arrangements that set the price of gas? | | MR. MAAS: That is correct. It was | contractual arrangements. | | Q. And then once the BCPC Agreement | was in place, the price being received by producers | was really an administered price set by the

53 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Government? | | MR. MAAS: Yes. | | Q. Also, the price that Westcoast was | selling gas at became an administered price as time | went along? | | MR. MAAS: Yes. The B.C. Government | essentially advised Westcoast what prices to set in | its contracts with the British Columbia | distributors, and then the parties would sit down, | revise the agreement, and sign it and carry on. | | Q. And the price in export sales was | administered or regulated by the federal | authorities? | | MR. MAAS: Yes. That came into play | about the same time. | | Q. Just so we have it clear, the | British Columbia Petroleum Corporation was a | Provincial Crown Corporation? | | MR. MAAS: That is correct. | | Q. So for practical purposes, at least | with regard to gas in British Columbia, BCPC became | the sole purchaser from the producers. Westcoast | was, in effect, the sole purchaser from BCPC, and | then Westcoast in turn sold to a number of parties | that had contracts with it. | | MR. MAAS: That is correct. To the | distribution companies as we have talked to, as | well as, of course, a good percentage of that BCPC | gas went to the export market. | | Q. And during the period of the BCPC | Agreement, from 1973 through until at least what, | 1985, all of the gas that was moving through the | Westcoast system continued to be owned by | Westcoast? | | MR. MAAS: Yes, that is correct. That | would be gas we purchased from BCPC, plus gas we | purchased in the Yukon and Northwest Territories | and Alberta. | | Q. Right. And then in 1985 the | Governments of Canada and the three Western | Provinces entered into the Agreement on Natural Gas | Prices and Markets. Is that so? | | MR. MAAS: They did. |

54 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Q. And the purpose of that was to | introduce a more flexible and market-oriented | pricing régime for natural gas? | | MR. MAAS: That is correct. | | Q. And Westcoast has generally been a | supporter of the initiatives to introduce more | flexible and market-oriented pricing? | | MR. MAAS: Yes. Westcoast certainly | was a proponent, particularly with respect to the | export market, of negotiated prices. | | Q. And that Agreement led to the | deregulation of the natural gas industry. | | MR. MAAS: Yes, in terms of the buying | and selling and pricing of natural gas. | | Q. As a result of that Agreement, and | further initiatives, parties other than Westcoast | had access to the Westcoast facilities to move | their gas. | | MR. MAAS: Access in the sense of | Westcoast entered into gathering, processing and | transportation agreements. That is correct. | | Q. So we now had the onset of a | situation where gas owned by other parties was | moving in the facilities of Westcoast. | | MR. MAAS: That is correct. | | Q. And another aspect of the | deregulation was that the Provincial Government | moved out of setting a field price for the purchase | of natural gas? | | MR. MAAS: Yes. I am not quite sure | when that occurred. I am not sure if that was in | 1985, but that did occur at some point. | | Q. I do not know if the exact date is | important. But as part of this process that was | initiated in 1985, the Government got out of | administered pricing in the field. Correct? | | MR. MAAS: Yes. | | Q. And that move led to others -- let | me go back for a moment. | | Up until the deregulation initiatives, | there were not any processing plants within British | Columbia that were owned by anyone other than

55 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Westcoast, except the historical ones. But as of | 1985, Westcoast owned all the processing facilities | in the Province, did it not? |

| | | MR. MAAS: Certainly all of the | treatment facilities. Unocal, I am not quite sure | what time they developed their facilities at Aitken | Creek. | | Q. I believe that was 1988. And there | were dehydration units and such in the field. But | the larger processing plants, they were all owned | by Westcoast. | | MR. MAAS: That is correct. | | Q. With deregulation and the removal | of administered field prices for natural gas, an | incentive was created for producers to build their | own processing facilities? | | MR. MAAS: I am not sure if it was an | incentive, but there was certainly an opportunity | or an availability of that option. | | Q. Thank you. And that is because | they could now move their own gas through the | Westcoast facilities, which until that date they | could not. | | MR. MAAS: When you say they could | not, with respect to gas -- no, I would agree with | that. | | Q. And as part of this -- I suppose it | preceded deregulation a bit. But at some point in | time, tolls were introduced on the Westcoast | system. | | That started in 1983, did it? | | Again the exact date is not --- | MR. MAAS: I do not recall. Well, I | guess Westcoast has always charged a toll, since it | was deregulated by the NEB. But in terms of | Transportation Service tolls, those were first | developed, I believe, in 1984, perhaps 1985; about | that time. | | Q. And then as others began moving gas | on the Westcoast system, you had to develop | transportation tolls and also tolls for your | gathering facilities. |

56 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| MR. MAAS: That is what I was speaking | of. About 1984 and 1985, we developed our | transportation tolls, including raw gas | transmission, processing, Transmission North and | Transmission South. Those toll zones have | essentially stayed the same since they were first | introduced. | | Q. And since the period of | deregulation that started in 1985, Westcoast has | moved from being a company that buys gas and sells | gas and makes its profit on the spread, to a | company that makes its profit on providing a | transportation service or a processing service or a | gathering service to various parties. | | MR. MAAS: Well, that in essence really | goes back to 1973, when the BCPC Agreement was | entered into. Essentially, we were providing a | service. We did not make money on the buying and | selling of gas, even in the export market. | | Q. The Agreement with BCPC is set out | in terms of a Gas Purchase Agreement, is it not? | | MR. MAAS: Yes. | | Q. And what it does is you buy the | gas -- or under the BCPC Agreement, Westcoast | bought the gas from BCPC, and the price that | Westcoast paid for the gas was set in effect by a | formula which allowed a return on investment. | | MR. MAAS: Yes. That is what I say. | We essentially made money -- the amount we were | allowed in that Agreement was essentially the cost | of us providing the services of raw gas | transmission, processing and transportation. | | Q. But it was set up such that, | although you earned a return on investment, it went | to cause fluctuations in the price that Westcoast | paid for the gas it was purchasing. | | MR. MAAS: Yes, in the sense that the | selling price was fixed by the Government, and to | the extent that Westcoast's cost of service varied, | and that we were on essentially a monthly cost of | service, then what -- we deducted from the revenues | of the selling of the gas our monthly cost of | service, and the remainder was returned to the BCPC | as the purchase price of gas. | | Q. But now the whole picture is | different. Westcoast earns its money directly on a | return on the assets that are involved in --- | MR. MAAS: Well, we now earn it on our

57 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| tolls -- but essentially that difference was a | toll. | | Q. And the tolls are set in respect of | the assets, the physical facilities you own? | | MR. MAAS: With respect to facilities | we own, yes. That is correct. | | Q. And BCPC, in 1990 -- I guess the | next step was that in 1990 CanWest Gas Supply came | into the picture, and BCPC novated or assigned all | of the gas purchase contracts to CanWest? | | MR. MAAS: Yes. I would not have been | able to say with certainty it was 1990, but that | sounds about right. | | Q. I asked Mr. Beattie. | | And in a broad sense, BCPC stepped out | of the picture and CanWest stepped in. CanWest is | an aggregator, a marketer that is owned by a number | of producers? | | MR. MAAS: That is correct. They | stepped into a different picture -- because by that | time the Fourth Service Agreement with Northwest | Pipeline had terminated. But essentially they | stepped into the picture with respect to the | | domestic contracts. | | Q. And was it at that time that | Westcoast stopped being involved in this | arrangement where it earned a return on the | difference between the sale price and the purchase | price under the BCPC Agreement? | | MR. MAAS: Well, that -- as we talked | of the method of determining what Westcoast got, | that was the point that --- | Q. That came about --- | MR. MAAS: Yes. | | Q. That came about as a result of the | National Energy Board setting tolls, and that first | started in about 1984? | | MR. MAAS: Yes. The Board set tolls, | and those were what was deducted, as opposed to the | cost of service as determined under the BCPC | Agreement. So that goes back -- I thought you were | suggesting that happened in 1990. | | That goes back --- | Q. Back to 1984 or so?

58 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | MR. MAAS: Back to when our tolls were | set, yes. | | Q. Going back to the Agreement on | Natural Gas as between the Federal Government and | the Provinces, that Agreement was also intended to | reduce the involvement of Government in the | evolution of the natural gas industry. | | Would you agree with that? | | MR. MAAS: Yes. And I think that is | with reference again to the buying and selling and | pricing of gas. | | Q. And Westcoast has generally been a | supporter of initiatives to reduce Government | involvement in the natural gas industry? | | MR. MAAS: Yes. In the buying and | selling of gas, yes. | | Q. And Governments are no longer | involved in establishing prices for natural gas, | either in the export market or the domestic market? | | MR. MAAS: That is correct. | | Q. And Westcoast supports those | initiatives, does it? | | MR. MAAS: Yes. | | Q. And the National Energy Board has | reduced its involvement in the review of supply | when looking at exports of natural gas? | | MR. MAAS: I am not sure if I would use | the word "involvement". They have changed over the | years their procedures. | | Q. They have introduced market tests? | | MR. MAAS: They introduced what was | called a Market Based Procedure, which provided, in | the case of an export, that any domestic purchaser | of gas, if they thought they had not had a | reasonable opportunity to purchase that gas, could, | by way of complaint, go to the National Energy | Board and ask the Board to review that particular | Export Application. | | Q. And Westcoast generally supports | that market-based approach, does it? | | MR. MAAS: Yes.

59 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | Q. And what has been happening in the | natural gas business is that market forces, since | 1985, since deregulation came in, have been used | more and more to determine supply and demand? | | MR. MAAS: Yes. | | Q. And Westcoast generally supports | that, does it not? | | MR. MAAS: We do. | | Q. Does Westcoast look favourably upon | its disengagement from the merchant function? | | MR. MAAS: I would say in retrospect, | yes. At the time perhaps we were a bit reluctant. | | Q. That is an honest statement, Mr. | Maas. | | These various measures that have been | undertaken --- | MR. MAAS: They have all been honest | statements. | | Q. Oh, I did not suggest otherwise. | Some perhaps could be more honest than others. | Yes, my comment should not have been taken to | suggest otherwise, Mr. Maas. | | The measures that have been taken since | 1985 have, on an overall basis, made the natural | gas industry much more responsive to market forces? | | MR. MAAS: Yes. | | Q. And they have assisted in enabling | Canadian natural gas to increase its markets? | | MR. MAAS: I believe so. | | Q. And I assume that Westcoast thinks | all of that has been quite good? | | MR. MAAS: Yes, we have. As I stated, | we have looked favourably on the deregulation of | the buying and selling of natural gas. | | Q. And deregulation has allowed others | to construct and operate processing plants in | British Columbia? | --- (A Short Pause) | MR. MAAS: I pause because when you say | "deregulation", I am not sure what aspect of | deregulation you are referring to.

60 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | Q. Well, let's take an example. If | all of the gas is being purchased on a field-price | basis, then a producer is not going to put in a | processing facility if the price that the producer | receives after processing is the same as the price | that the producer would receive without processing? | | MR. MAAS: Well, yes, that makes sense. | | Q. And would you not agree with me | that -- let's put it this way: Before | deregulation, there were not any producer-owned | processing facilities in British Columbia, and we | now have some. Would you agree with me there is | some correlation between those two events? | | MR. MAAS: Yes. | | Q. With that background in mind, Mr. | Maas, market forces more at work and deregulation | in the natural gas industry, do you not think it is | somewhat anomalous for all of us to be sitting here | today to have a Government body decide if a new | processing plant should be built? | | MR. MAAS: No. | | Q. I cannot say your answer surprises | me. | | MS. PEVERETT: Mr. Johnson, one of the | Articles that BC Gas has filed -- or, rather, | speeches that they have made reference to -- in | this is a speech made by Mr. Priddle, and in that | speech Mr. Priddle refers to a lot of this process, | and some of his observations I think are | interesting. He says that: | "Overall, the regulatory fit is a good | one on both sides of the border..." | He is speaking of the Canadian-U.S. border, | "... and is responsive to the | competitive environment in which | natural gas is sold." | He goes on to speak about rolled-in | tolling methodologies, and he says that: | "The rolled-in methodology also means | that no one gets a competitive | advantage out of an historical shipper | position on a regulated monopoly as | they would under incremental or vintage | tolling." | What I take from that speech is that it | is not inconsistent to have a utility build | regulated processing plants and charge all | customers the same. That does not necessarily mean | a less competitive market for the commodity cost of

61 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| gas. | | MR. LUTES: Just before Mr. Johnson | continues, Madam Chair, I am getting some signals | from my Panel that they would like to have a break. | I do not want to interrupt Mr. Johnson, but if it | is okay with him, could we take the break now. | | MR. JOHNSON: It is certainly fine with | me. | | THE CHAIRMAN: We will break for 20 | minutes. | --- A Short Recess | --- Upon resuming | THE CHAIRMAN: Please proceed, Mr. | Johnson.

| | | CROSS-EXAMINATION BY MR. JOHNSON, on behalf of BC | Gas Utility Ltd. (Continued): | Q. Mr. Maas, do you accept the view | that regulation is a surrogate for competition? | | MR. MAAS: Yes. | | Q. In the gathering and processing | functions in British Columbia, there is | competition, is there not? | | MR. MAAS: Yes, there is. | | Q. You have read the Evidence of Mr. | Edgeworth in the Multi-Pipeline Proceeding -- the | cross-examination? | | MR. MAAS: I have. | | Q. And the broad message that was | being put forward on behalf of Westcoast in the | Transcript extract that has been marked as an | Exhibit was that Westcoast is facing competition in | gathering and processing? | | MR. MAAS: That is correct. | | Q. Just before I go on, there was a | note I had to myself here. | | In terms of the Board's seeking of | views of parties on secondary markets, did | Westcoast support the removal of a price cap? | | MS. PEVERETT: I would have to check | exactly what our Submission was. I think we were

62 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| fairly neutral. We did not oppose it. | | Q. Can I ask you to turn to COFI | Information Request No. 7. This is something that | was discussed with you earlier: page 2 of the | Response, Item (c), where it says: | "Westcoast understands there are | several companies prepared to pursue | gathering and processing opportunities | in the region of these projects." | And I think it was Mr. Weisberg that | asked you if you knew who was referred to there, | besides Novagas, and your answer was "no". | | Is that so, Mr. Maas? | | MR. MAAS: I could surmise who would be | involved, but I do not know as a fact, other than | Novagas Clearing House. Certainly, we are aware | that Williams Field Services set up an office in | Calgary and has been advising parties that it is | willing and able to develop processing plants. | | Q. Yes. I was going to refer you to | page 2917 of the Cross-Examination Evidence, | Exhibit C-17-21, from the Multi-Pipeline | Proceeding. Perhaps you could look there, Mr. | Maas. | | MR. MAAS: What page? | | Q. Page 2917. And it is also at page | 2921. Page 2917, right at the bottom of the page, | and over the page to 2918. | | MR. MAAS: Yes. | | Q. And also at the bottom of page | 2922, the last paragraph | MR. MAAS: Yes. | | Q. And the references there are to | Enron, Williams Clearing House, and Westcoast Gas | Services. | | MR. MAAS: That is correct. | | Q. Mr. Edgeworth was identifying those | four firms as competitors in the gathering and | processing operations in British Columbia, or | potential competitors? | | MR. MAAS: Yes, I think he is referring | to them as "potential competitors". | | Q. Right. And those parties, it is | fair to say, is it not, are capable of building a

63 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| processing operation in the Fort St. John area, and | gathering and processing gas in that area? | | MR. MAAS: Well, I do not know that | they have necessarily the expertise within their | firms to do that, but certainly they could contract | to do that. And I would repeat, I do not believe | any of these firms would likely propose the | facilities we have proposed, which are integral to | the whole system we have in that area, in order to | optimize the overall system. | | Q. Perhaps not exactly the same | facilities, but one can gather and process gas | without exactly the same facilities. | | MR. MAAS: Yes, that is true. | | Q. If you could turn to page 2918, at | line 13, Mr. Edgeworth is there referring to an | advertisement in the Calgary Herald by Williams | Field Service. | | I believe you were in Calgary at that | time, Ms. Peverett. | | MS. PEVERETT: Are you speaking about | the day that he made that comment? | | Q. Yes, the time he made the comment. | | MS. PEVERETT: I might have been. | | Q. You might have been? | | MS. PEVERETT: I did not attend all of | the Multi-Pipeline, so I am not sure if I was there | for that day. | | Q. Okay. Well, I was going to ask you | if you recognized this ad as the ad to which Mr. | Edgeworth was making reference. | | MS. PEVERETT: I have seen Williams | Field Services' ads. Whether it was that | particular day or not, I do not know. | | Q. If I could identify it, it is an ad | taken from the Calgary Herald on November 26th of | 1994, is it? | | MR. MAAS: That is correct. | | Q. And is that the ad that Mr. | Edgeworth was talking about a few days later when | the evidence was presented? |

64 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| MR. MAAS: Presumably. | | MR. JOHNSON: Perhaps we could have | that marked. | | THE CLERK: That will be Exhibit No. | C-17-30. | --- EXHIBIT NO. C-17-30: | Williams Field Services Ad from Calgary | Herald of November 26, 1994 | MR. JOHNSON: I might say the original | was larger than this. It has been photo-reduced to | get it on a piece of paper. | | Q. In that ad, Williams Field Services | Group, Inc. indicates that it is part of The | Williams Companies, a $5 billion corporation, and | in the first paragraph of the narrative it says: | "Williams Field Services Group, one of | the largest natural gas gatherers in | the United States, is now seeking | gathering and processing opportunities | with producers in Alberta, British | Columbia and Saskatchewan." | Is that your understanding, Mr. Maas? | | MR. MAAS: That is what the ad says. | | Q. And beyond what the ad says, do you | understand that they are out looking for gathering | and processing opportunities in, amongst other | places, British Columbia? | | MR. MAAS: Yes, I would presume they | are. | | Q. And Williams Field Services does | operate gathering and processing in the U.S., does | it? | | MR. MAAS: They do, although I do not | know that they operate any sour gas services. I | think most, if not all, of their processing seems | to be liquids removal. | | Q. Can I just ask you to turn to page | 2912 of the Transcript, Exhibit C-17-21. At line | 13, Mr. Edgeworth says: | "I think, Mr. Chairman, this is maybe a | good point, and it is the evolution of | the gathering and processing business | that we have. Things are changing." | Would you agree with that, that things are changing | in the gathering and processing business? | | MR. MAAS: Yes. |

65 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Q. And would you agree with me that a | fresh examination of gathering and processing as it | is regulated by the National Energy Board -- that | it is about time to do that. | | MR. MAAS: No, I do not think so. I | think clearly Westcoast facilities fall under the | purview of the National Energy Board. In terms of | a fresh look, a review, I think in the future we | may come to the Board with suggestions for perhaps | a little more flexibility to allow us to compete. | I think it is important, however, that Westcoast | continue to compete. To not do so I think would | threaten our existing facilities, that others may | come in and not only build facilities to gather and | process new gas, but may as well attempt to gather | and process gas which now goes through the | Westcoast facilities. | | I think it is important for us to be | competitive and to continue with our business. | | Q. Isn't that the very essence of | competition, Mr. Maas -- that people can come in | and may take your business away? If they can do it | a little better or a little cheaper, that is what | happens. | | MR. MAAS: It is, yes. | | Q. Right. You made mention of | flexibility, and I think you said something similar | -- it was yesterday or the day before. | | Westcoast sees that in some areas it | needs a little more flexibility to be able to | compete. | | Is that what you are saying? | | MR. MAAS: I think so. And certainly, | as we have talked about, timing issues can be | critical. | | I know the Board does its best to react | on a timely basis to applications, and we have to | continue to work with them to certainly provide | them with the information that allows them to make | their decisions as expediently as possible. | | Q. Would you agree with me that you | would have the most flexibility if you were not | regulated? | | MR. MAAS: Well, I am not sure that | that presents a viable alternative. I think if the | NEB did not regulate us, we would, nevertheless, be

66 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| regulated. So I think we would still face those | same issues. | | Q. Would you agree with me, Mr. Maas, | that it is inevitable that processing in British | Columbia, including Westcoast-owned processing, | will at some point be deregulated? | | MR. MAAS: No, I do not think that is | inevitable. And I say that because Westcoast is | the major gatherer and processor of gas in British | Columbia, and as much as we might like to be | deregulated and be able to charge whatever the | market would bear, I do not think that is likely to | happen. Our tolls, whoever the regulator might be, | would always be regulated. | | Q. Would you agree with me that if not | inevitable, then, from the perspective of | Westcoast, it would be desirable to have its | gathering and processing facilities deregulated at | some point? | | MR. MAAS: Well, you say "desirable". | I mean, one could put many faces on that. I think | that is just a hypothetical. As we see the | business evolving, we do not see the opportunity | for us to be unregulated. | | Q. I think you seem to be expressing a | fear over regulation by some other authority. | | MR. MAAS: No, no. If that was the | impression, that was not the impression I intended | to leave. The point I was making is -- you were | suggesting that if the National Energy Board did | not regulate Westcoast, then we could compete in | this competitive market, unfettered of regulation. | | Again, I just do not see that as being | a scenario that is likely to unfold. | | Q. I appreciate what you are saying | there. But if you just put that aside for a moment | and assume for a moment that Westcoast's gathering | and processing facilities could in fact compete in | a free market, not be regulated as to tolls -- | there would still, obviously, be some Environmental | Regulations and Safety Regulations, et cetera, but | not regulated economically -- does Westcoast see | that as a desirable, long-term objective? | | MR. MAAS: Well, generally one sets | objectives in terms of what is possible. So, | again, I am not sure that it is possible. | | If Westcoast were given the opportunity

67 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| to exert the market power to operate unfettered, in | terms of the setting of the prices at which it | charges, obviously that would probably be something | that would potentially be appealing. Now, that is | not to say there are not other issues that would | have to be dealt with. But, yes. | | Again, I do not see that as being | probably a plausible scenario. | | MR. JOHNSON: That completes my | questioning. Thank you. | | Before I leave the microphone, I do | have a document to file. This relates to the | Evidence of BC Gas Utility Ltd. Mr. Lloyd, who I | believe will be on the stand tomorrow, has an | Opening Statement, and I would like to distribute | that. | | THE CLERK: That will be Exhibit No. C- | 17-31. | --- EXHIBIT NO. C-17-31: | Opening Statement of P.D. Lloyd, on | behalf of BC Gas Utility Ltd. | | THE CHAIRMAN: Thank you, Mr. Johnson. | | Mr. Beattie...? | | MR. BEATTIE: Madam Chair, Members of | the Board: My name is Bob Beattie, and I am | appearing on behalf of CanWest Gas Supply Inc. | | I have asked Lorraine Bolton, CanWest's | Manager of Gas Supply, to join me, in the likely | event I will need assistance during the session. |

| | | CROSS-EXAMINATION BY MR. BEATTIE, on behalf of | CanWest Gas Supply Inc.: | Q. Members of the Panel, my questions | will be segregated into two categories: one | relating to the facilities portion of the | Application, and the other relating to the RGT | portion of the Application. | | If I address a question to a particular | person incorrectly, please feel free to have the | right person address the question. | | I would ask you to turn to CanWest IR | Number 3 and familiarize yourselves with | Westcoast's Response, stating that: | "The two Plants will be considered as

68 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| one from a contractual and allocation | perspective." | CanWest has introduced a page which is | titled "Simplified Process Flow Diagrams", entered | as Exhibit Number C-20-6. | | I would ask you to turn your attention | to this diagram. | | Madam Chair, we have extra copies, if | needed. | | Do you have the Exhibit, Panel? Mr. | Maas...? | | MR. MAAS: We do. | | Q. In the diagram, I see handwritten | numbers, which I understand to be Westcoast | numbers. And I would note that with respect to the | New Aitken Creek Plant, the heat value indicated is | 36.6 GJ/103m3; and after re-injection of C3 and C4, | it is 38.5 GJ/103m3. And McMahon has a heat value | of 41.4 GJ/103m3. | | Mr. Maas, I am told that McMahon | presently has a heat value of at least 41.6 | GJ/103m3. Now I am not asking you if the | handwritten numbers for New Aitken Creek Plant are | absolutely correct. However, could you advise if | they appear to be reasonably close to reality? | | MR. TUBB: Those numbers are the | numbers that were conveyed to us by the design | engineers. And I think they have previously | indicated those were the results of their studies | of the composition of the gas entering that plant | and the end result --- | Q. So you are saying, Mr. Tubb, I can | rely on these numbers as being close to correct? | | MR. TUBB: Yes. They are the result of | the design process. | | Q. Fine, thank you. | | Mr. Maas, you and Mr. Bursey had a | dialogue set out on page 1459 of the transcript. | In essence, what Mr. Bursey asked in part of the | dialogue was: Is the heat value of the gas coming | out of the New Aitken Creek Plant different than | the gas coming out of McMahon. And your answer | was, "It is slightly lower...". | | MR. MAAS: That is correct. | | Q. Mr. Maas, would you confirm for me,

69 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| please, that the figures shown on the Exhibit | indicate less heat value for the New Aitken Plant | than the McMahon facility? | | MR. MAAS: In terms of the residue gas | stream, that is correct. | | Q. Thank you. Now, Mr. Tubb, could | you advise what you believe the numbers at the | bottom of the exhibit represent? And I am looking | at the overall Fort St. John product slate. | | MR. TUBB: The first number, the | Residue gas number, 940 Mmcf/d, is the residue | capacity of the New Aitken Creek Plant and the | existing McMahon Plant combined. And the 40.7 | GJ/103m3 is the average of the heat contents of the | two facilities. | | I believe the 40.7 is in all likelihood | derived from, first of all, 290 Mmcf/d at 38.5, at | the top of the diagram. And, by my calculation, | the remainder of the heat that was used to derive | that would be 650 Mmcf/d, which is the capacity of | the McMahon Plant after the installation of the | second thermal oxidizer. At a heat content close | to what we are experiencing today -- which is, as | you previously mentioned, something in the | neighbourhood of 41.6. So it is probably 41.6, | 41.7. | | I did not do these calculations myself | so I can only surmise as to the exact numbers that | went into them. But those are the numbers that | would result in the average of 40.7. | | Q. Thank you. Now as an example only, | I would like to take the situation of a McMahon | shipper who has not applied for expansion treatment | service and who holds existing firm service of | 10,000 103m3 per day. My calculations, using the | heat content shown on this exhibit, say that a | McMahon shipper is receiving 414,000 GJs per day, | and similarly, using the numbers shown at the | bottom of the exhibit, say that such shipper would | now receive, after the expansion is in play, | 407,000 GJs per day. | | Do you agree with those numbers, Mr. | Tubb? | | MR. TUBB: Yes, based on the heat | contents on the diagram. | | Q. Now if this allocation method is | adopted, in my example such a McMahon shipper would | receive 7,000 GJs per day less than he is currently

70 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| selling to market. | | Mr. Tubb, is it not true that | regardless of the actual numbers, as long as the | heat value of New Aitken Creek Plant residue gas is | less than the McMahon heat value, and as verified | by Mr. Maas, such a shipper will lose GJs for sale | if such an allocation is made, regardless of the | numbers? | | MR. TUBB: Two things in response to | that, Mr. Beattie. First of all, the residue gas | gigajoules will go down, but there is a certain | amount of energy coming into the system overall, | and so to the extent that residue gas gigajoules | are down, there should be compensating increases in | the liquids gigajoules. | | I think we indicated previously that | there is a need, in order to produce spec gas, to | remove liquids from the gas stream, and that is | something that has to be done. It is that | requirement to reduce spec gas that results in the | heat content at the New Aitken Creek Plant. But in | removing those liquids those gigajoules are not | lost to shippers; they are simply provided to them | in terms of liquids rather than residue gas. | | I think the other thing to keep in mind | here is that these facilities are being proposed to | be built at Aitken Creek because we believe that is | the most efficient, economic way of providing this | expansion. Were the facilities to have been built | at McMahon rather than at Aitken Creek, or designed | to be built at McMahon rather than at Aitken Creek, | we still would have had to undertake this level of | dew point control, so that at the end of the day an | expansion at McMahon or an expansion at Aitken | Creek would have produced roughly the same results | as we see here. | | Q. I think I understand you to be | saying I will have less GJs in my gas stream but I | will be getting compensated in liquid GJs? | | MR. TUBB: Yes. Generally speaking | that should be the case. Whenever there is a shift | between gigajoules in residue gas and gigajoules in | liquids, there can be some distortions, depending | on the specific allocation methodologies that are | used. Relative to today's situation there are | volumetric allocations of gas and volumetric | allocations of liquids, and so to the extent it | shifts between one and the other it is possible | that there will be some changes from shipper to | shipper. But on average, the total amount of | energy coming into the system will end up being

71 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| allocated to all shippers, less of course any | energy consumed in the gathering and processing. | | Q. Well, I have great faith in my | Marketing Department, but I think it might be a | stretch if he has to go a customer and announce | that instead of taking residue gas you are going to | have to take condensate. In other words, I am | selling him residue gas today and you are telling | me no, now I have got to give him some | condensate -- and I am just saying it might be a | stretch for our Marketing Department to explain | that to the customer. | | MR. TUBB: Well, I think you are | correct in that you will get less residue | gigajoules, but I guess from the perspective of an | evolving system, or even in year-to-year operations | on the system, there are fluctuations in the heat | content of the residue gas. Even at McMahon | itself, there have been fluctuations over the years | in terms of the heat content. | | As we said, I think it is a necessary | result of producing additional spec gas for people | in the Fort St. John system. I think it is just a | natural consequence of the development in that area | and the addition of further processing capacity. | | Q. I appreciate the point, but my | example was for a McMahon shipper who has not | applied for Expansion Service. | | MR. TUBB: Yes. All existing McMahon | shippers, whether they have or have not applied for | Expansion Service, will have lower heat content | residue gas. | | Q. I am starting to get confused as to | whether Aitken Creek is built or not, so I will | move on. | | MR. MAAS: Your comment about your | marketing and your customers, I think that would be | true to the extent you are selling your gas on a | volumetric basis and that gas had less energy | content per unit volume. But to the extent you are | selling gas on an energy basis, presumably the | customer is getting the energy the customer has | contracted for. | | Q. I wonder if I can turn to the | liquids shown on the exhibit now, Mr. Tubb, and I | take the situation of the McMahon existing shipper | who is currently receiving 150 cubic metres per day | of C3 and 240 cubic metres per day of C4 product. |

72 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| If the allocation procedure is adopted, | will such shipper's existing C3 and C4 product | levels not be reduced? | | MR. TUBB: I would expect so, in that a | significant portion of the C3, C4 would be delivered | to shippers as energy re-injected into the residue | gas stream. So the physical product itself I would | expect to go down. | | I am just trying to see if I could | conceive of circumstances where that would not be | the case. I think as a general rule that would be | the case. | | Q. So again I have my existing McMahon | shipper selling 100 units of C3, for example, and | now we are allocating -- if he has signed a | contract for 100 units he is not going to have 100 | units for sale under this allocation method. | | MR. TUBB: If he is having the same | amount of gas processed, I would say that that | would be the end result, yes. He would not have as | much C3 product or C4 product available. | | Q. Thank you, Mr. Tubb. Mr. Tubb, I | am having a bit of a hard time understanding the | process of how shippers are to address this | allocation issue, and I would ask you to bear with | me while I walk you through my difficulty. | | In answering a question from Mr. Bursey | on February 20th, at Transcript page 1420, Mr. | Tubb, you say: | "We have put to industry what we | believe is a reasonable proposal, and I | think we described that in one of our | Information Responses. | That was put to industry some | months ago and although we have not | finalized it, we have not actually | heard from anyone any counter | suggestions up to this point." | Mr. Tubb, when was the proposal put to | industry? | | MR. TUBB: At the Shippers' Meeting in | Calgary in November. | | Q. I believe it was November 16th. | Does that sound close? | | MR. TUBB: It sounds about right. | | Q. Now I would ask you to note | CanWest's IR No. 1, which was submitted about

73 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| November 28th, after the Shippers' Meeting. Have | you got it handy? | | MR. TUBB: I have it. | | Q. And I will read it. It is not too | long. | | "Has Westcoast determined the method to | be used for production allocation from | the two plants? If yes, please advise | of the method. If no, please advise | how the method will ultimately be | decided and by what date such | determination should be made." | I could not see a "yes" or "no" in the | Response, but I will address the Response. | | In the second paragraph Westcoast | stated that: | " Westcoast plans further discussions | with shippers with the intention of | arriving at a mutually acceptable | allocation methodology." | Now in light of our question: "If no, please | advise how the method will ultimately be decided", | could you read Westcoast's answer as being a "no"? | | MR. TUBB: Yes. I would say it has not | been decided. This question -- could I just have a | minute to review it? | | MR. BEATTIE: Sure. | --- (A Short Pause) | MR. TUBB: The question applies, as I | understood it, to the allocation of all products at | the plants, not specifically liquids. | | During the Shippers' meeting, one of | the questions was raised: How would we allocate | production when there was a constraint at one of | the plants? | | As we have indicated -- I believe it | was the previous Panel, the one that you talked to: | Mr. Thorneycroft, Mr. Papile --- | Q. Yes...? |

| | | MR. TUBB: -- there are still some | studies to be done as to what degree of flexibility | there is in the gathering system during times of | constraints at one of the plants. That remains an | issue that we feel we need to get some more | specific facts on. It is the one that we have been

74 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| working on so that we can have a complete package | to take back to people for further discussions. | | In fact, at the November Shippers' | Meeting, my sense at the meeting was that that was | the main issue that came out of our proposal as to | how we would allocate production from the plants. | The main concern from the floor appeared to me to | be concern about what we do when there is a | constraint at one of the plants. | | Q. So you are saying there will be a | follow-up meeting at which people can address the | procedure that has been introduced to the Shippers? | | MR. TUBB: Yes. I would see it, in all | likelihood, going to a group like the Joint | Industry Operating Committee for further | discussion. | | Q. And there has not been a meeting | set? | | MR. TUBB: No, not at this point. | | Q. Okay. So to wrap up this part of | my question, Mr. Maas, to reiterate: As long as | the Aitken Creek Plant has less heat value under | the Allocation Proposal, won't my example about a | loss of GJs to the McMahon Shipper be valid? | | MR. MAAS: I think Mr. Tubb answered | that question. | | MR. TUBB: There will be a loss of | residue gigajoules. But overall, on average, the | allocation of gigajoules of the various products | should be essentially the same. | | Q. Thank you, Mr. Tubb. | | I would now like to turn to another | area of concern, which is highlighted in the | Response to Canwest IR No. 1. I am looking at, | particularly: | "Westcoast plans further discussions | with shippers with the intention of | arriving at a mutually acceptable | allocation methodology." | Now, from Table 2.5 in the Westcoast | Application, I count twenty-five expansion parties. | | Mr. Tubb, I would like to hear your | assessment of the likelihood of achieving unanimity | of all Interested Parties with respect to an | Allocation Proposal. I will use four ranges of | probability: Category 1, 75 percent to 100

75 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| percent; Category 2, 50 to 75 percent; Category 3, | 25 to 50 percent; Category 4, zero to 25 percent. | | Now, to achieve unanimity on an | allocation process, which category do you believe | would be realistic to expect out of twenty-five | parties? | | MR. TUBB: First, I imagine the group | would be even larger than the twenty-five, because | it involves all shippers at McMahon -- and we | certainly plan on consulting with everyone. | | I would say the probability is low that | we would have unanimity because, as with many | things on the system, changes do not fall equally | on everyone. So to the extent that some would see | a certain proposal having positive aspects for | them, they would, in all likelihood, support it; | others who saw our proposal as having negative | aspects would, in all likelihood, not support it. | | Q. So has Westcoast discussed | internally how agreement will be reached? Will it | be a simple majority, contracted service vote, 50 | percent? | | MR. TUBB: We have not considered that | internally. I would think it would depend on the | kind of feedback we get in these future | discussions. And if, at the end of the day, there | does not seem to be a clear course of action, then | we would find ourselves, I suppose, back before the | Board in order to determine what would be an | appropriate approach. | | Q. Mr. Maas, if agreement cannot be | reached due to the various needs of the parties, is | it not possible to allocate the GJs, regardless of | how the gas physically flows, so that existing | shippers not applying for expansion treatment | service can be kept whole? | | MR. MAAS: I do not think that would be | realistic. And, as Mr. Tubb already said, the | gigajoules vary now over time. So nothing stays | constant. Coming out of this process, I would | hope, would be a consensus where no particular | shippers were unduly quote/unquote, "penalized", | versus quote/unquote, "benefited", but that is a | process we have to go through and see where we end | up. | | Q. But if you take the case of my | example of the existing shipper, he is already, by | an allocation method, being denied access to | certain C3 and C4, and I would like to still

76 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| maintain that he has lost GJs in his gas stream. | So he is being negatively impacted on by this | Aitken Creek facility. And I am just talking about | keeping him whole. Why shouldn't he be kept | whole? | | MR. MAAS: Well, again, we try to treat | all of our shippers equally, in terms of the | methodology we employ, and that there is | essentially a fair allocation. Maybe it is | arguable that what we are doing now is not a fair | allocation as circumstances change. Whether we | were building the New Aitken Creek Plant, as Mr. | Tubb said, or doing something different at the | McMahon Plant, these things will change. | | We have to meet our gas spec. We are | not setting out to design a plant which is somehow | going to disadvantage a particular shipper or set | of shippers. But we have to meet the gas spec, and | our particular problem here relates to the total | sulphur spec. | | Q. Thank you, Mr. Maas. And --- | MR. MAAS: Which I might add, as I | stated the other day, is also a problem at McMahon. | | Q. Mr. Maas, when you start up a large | facility such as the New Aitken Creek Plant, are | there usually what I would call start-up problems? | | MR. MAAS: Well, when one starts up one | can anticipate that there will be things that will | require -- in your sense -- start-up problems, | where things will need adjustment, or whatever, to | have them operate the way one would desire. That | is not uncommon in any new facility. | | Q. Where I am coming from is if the | New Aitken Creek Plant has start-up problems -- and | I do not mean problems in terms of incorrect | construction or anything like that, but just | practical start-up problems -- when would this | allocation procedure click in? Would it be after | the start-up problems have been satisfied and the | plant is 100 percent operational, or in fact would | an existing McMahon shipper, through the allocation | process, also have to share the pain of the start- | up problem? | | MR. MAAS: I do not think we have | addressed that at this point, but certainly it | would be our intention in the commissioning process | to work the bugs out before we get to the point | where we are providing firm service. | | Q. I was not aware of that. Thank

77 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| you. | | I would like to now address the RGT | portion of the Application -- and I wish I had a | similar simplified diagram relating to this portion | for my questions. On Table 2.5 of the Application | it states that CanWest has applied for 2,413.5 103m3 | of RGT Expansion Service and zero Treatment | Expansion Service. | | Mr. Tubb, I would like to address the | issue of resourcing, and in order to do so would | like a bit of history on Westcoast's contracting | and operating procedures with respect to RGT. | | Could you generally describe | Westcoast's contracting practices with respect to | RGT Renewal Service, from 1991 to date, including | the change in 1994 when Westcoast listed firm | receipt points capacity in a Schedule B and | requested shippers warrant supply to such listed | receipt points. | | MR. TUBB: I think our procedures, | except for the addition of the Schedule B that you | noted, have been the same over that period of time. | | We typically send to shippers service | agreements providing for those renewals in advance | of the date that they have to give notice in order | to accomplish that renewal, and ask them to execute | those agreements and return them to us, to the | extent that they do want to renew those services. | | Recently, as you have mentioned, we | have added to that a Schedule B, which formally | incorporates in the contract the shipper's | authorized receipt points in the raw gas | transmission system, that formerly or previously | was covered by the phrase "authorized receipt | points" in the contract itself. | | There was no specific list in the | contract per se of those authorized receipt points. | | We felt that that was a positive change | to the service agreements. Although Westcoast had | always had knowledge of where it had authorized the | service, there seemed to be some confusion on the | part of shippers due to the day-to-day flexibility | that was available in the gathering systems to move | their gas around. | | There seemed to be some confusion as to | what their actual firm rights were under the | contract, so we added that in order that would be | clear. We felt that was also necessary because the

78 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| gathering system was getting tighter, so that | degree of flexibility was disappearing. | | So that was why the Schedule B was | added. Other than that, our practices have not | changed over that period. | | Q. So as a result of introducing the | Schedule B, you have noticed quite a change by | shippers trying to line up their supply to the | receipt point? | | MR. TUBB: Some shippers have made a | significant effort to make changes. For many | others, we have found that their situations lined | up pretty well with the Schedule B's. | | Q. Could you advise how a company | holding firm existing RGT service at a particular | receipt point, whose supply has declined, | terminated or whatever, can make a switch to a new | receipt point backed up by supply. | | What would they have to do? | | MR. TUBB: They would request service | from Westcoast. The nature of that request for | service would be to reduce their firm raw gas | transmission volume at their receipt point where | they no longer wish the same level of service that | they currently have and increase the level of | service by a corresponding amount at the new | location they wish to have firm service. | | Q. Mr. Thorneycroft, at Transcript | page 753, in answer to a question I posed, | characterized "`resourcing' as being a change of | receipt point on [Westcoast's] system, where gas | currently delivered at one point, or gas delivered | under a contract at one point, is moved to another | delivery point under the same contract." | Would you characterize "resourcing" in | the same manner? | | MR. TUBB: That sounds about right, | yes. You currently have firm service, firm at a | particular receipt point, and you wish instead to | have that firm service with a different receipt | point. | | Q. If the New Aitken Creek Plant | facility portion of the Application is not approved | and a shipper has applied for RGT service tied to | resourcing, could the Board approve such applied- | for RGT service on a requested in-service date? | | MR. TUBB: If the Board had in front of

79 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| it an application that had the Raw Gas Transmission | facilities in a form that would provide that | resourcing, I do not know whether, procedurally, it | is possible or not. But I think if they had the | physical information, that certainly would be one | step in that direction. | | Unfortunately, the situation here is | that we have an integrated design, an integrated | set of changes to the Raw Gas Transmission System. | And to my knowledge there is no specific facility | anywhere in the group of facilities we have applied | for that could be identified as specifically for | resourcing. Even those that Mr. Thorneycroft was | mentioning, Tommy Lakes and Milligan-Peejay, all | have in them elements of additional Raw Gas | Transmission service that relate to the New Aitken | Creek Plant. | | So to the extent we were to only | attempt to accomplish through new facilities, | resourcing -- I think Mr. Maas already mentioned | earlier -- we would have to go back and redesign | all of these facilities. The lengths of the loops, | the diameters of the loops, would all be, in all | likelihood, quite different. | | In fact, if the gas was to flow to | McMahon, we might well have to look at things like | changes to Station 1, because the gas would be | flowing in a completely different pattern. | | An example of that is the Tommy Lakes | gas. To get that all the way down to McMahon would | require I think a completely different set of | facilities than just, for example, some looping on | the Tommy Lakes line. |

| | | Q. What happens if the Board turns | down the Aitken Creek facility? Does all the RGT | portion of this Application get thrown out as well? | Is that what you are telling me? | | MR. TUBB: Yes. | | Q. I have one last question. We note | that the proposed in-service date of the Aitken | Creek facility has been delayed. One of the maps | in the Application shows a lot of the flow as going | to McMahon, and I am wondering how the applied-for | RGT service will be impacted by such an unrelated | delay. |

80 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Aitken Creek is being shoved back in | period of time but CanWest has applied for RGT | service for quite some time now, actually. We | would almost want that approved, to have an in- | service date of say, next year, or currently. And | now this Application for Aitken is delayed. | | But I think your previous answer has | taken me out of my question even. | | MR. TUBB: The difficulty that I think | we face is that in order to minimize the cost of | all of these facilities, for all shippers, an | integral part of the design of the Raw Gas | Transmission System was the shifting of some of the | loads in the more extreme parts of the system over | to the New Aitken Creek Plant. Had we designed | facilities simply to resource existing gas, some of | those would have become redundant with the | introduction of the new Aitken Creek Plant. | | So as we have said, I think from the | outset, this is an integrated solution that we are | proposing here, to all of the increased demands for | service in the Fort St. John area. | | MR. MAAS: To give you some hope, Mr. | Beattie: I do not have the construction schedule, | but some of the pipelines are completed at | different times than the actual plant. So whether | some resourcing could be accommodated prior to | completion of the plant -- that is prior to | September -- that perhaps is a possibility. I do | not know that for certain, but we have construction | schedules for parts of the total project which | might permit that. | | Q. I don't know whether you are | offering an olive branch in a sense if CanWest gave | you a list of RGT service tied to resourcing, would | you amend your Application such that the Board | could consider that? | | MR. MAAS: No. That would, I think, | just slow down the Application, and we want to get | this approved as quickly as possible. | | MR. BEATTIE: Fine, thank you. | | Those are all the questions I have, | Madam Chair. Thank you, Panel. | | THE CHAIRMAN: Thank you, Mr. Beattie. | | Mr. Miller, please. | | MR. VOLLMAN: Mr. Tubb, could I ask you

81 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| a question, while the counsel are changing? | | MR. TUBB: Certainly. | | MR. VOLLMAN: These lost GJs that Mr. | Beattie is concerned about, I gather since they are | not in the gas and he is not getting them in | propane that they are in the condensate. | | MR. TUBB: That is right, yes. There | is still the same total amount of energy coming | into the system, and the same total amount of | energy will be made available to shippers. | | MR. VOLLMAN: So the producer is kept | whole in terms of dollar value by selling the | condensate. | | MR. TUBB: Yes. | | MR. VOLLMAN: Is there a reason why | they would not be happy with that? | | MR. TUBB: I would hope not. | Everyone's circumstances are different. To the | extent they favour the sale of one product over | another, to the extent that they favour, for | whatever reason, residue gas over condensate, for | example, then they might not be happy with that | situation. | | MR. VOLLMAN: The main thrust of my | question, though, is that I was just trying to | satisfy myself where the missing GJs went. And | they are in the condensate. | | MR. TUBB: There are no missing GJs; it | is just where they are. | | MR. VOLLMAN: They are in the | condensate. | | MR. TUBB: Right. | | MR. BEATTIE: I am sorry, Madam Chair, | I am back. | | THE CHAIRMAN: So I see. | | MR. BEATTIE: Just for a point of | clarification. | | I note where we are going to have | future meetings with Westcoast on the allocation | procedure, but our numbers do not show a one to one | condensate per lost GJ. We will have discussion | with Westcoast on that, but our numbers do not show

82 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| as being one to one. | | MR. VOLLMAN: So we have not really | found them all. | | MR. BEATTIE: No. | | MR. TUBB: I do not believe that at | this point there is information available that | would allow you to conclude that there are missing | gigajoules. I think just in a general sense that | you have to conclude that there is a certain amount | of energy coming into the gathering system, and | therefore it is going to be around somewhere, | coming out of the plants, or out of the liquids | facility. | | MR. BEATTIE: As I say, there will be | future discussions on those numbers. | | MR. VOLLMAN: We will stay tuned. I | assume Mr. Miller is going to be looking for them | as well. | | MR. MILLER: We will see what we can | find. |

| | | CROSS-EXAMINATION BY MR. MILLER, on behalf of | Petro-Canada: | MR. MILLER: Ms. Peverett, gentlemen, | my name is Rusty Miller. With me is Mr. John | MacPherson. We are here on behalf of Petro-Canada. | | I am somewhat tempted to get a hand | puppet here. If you have any difficulty seeing me, | I will just borrow some of these transcripts and | stand on those. (Counsel referring to height level | of microphone.) | Q. I would like to start off by | outlining with you the reason for Petro-Canada's | concern. | | Am I correct that you are aware that | Petro-Canada is a shipper on the Westcoast | Pipeline? | | MS. PEVERETT: Yes, we are. | | Q. And you are aware that Petro-Canada | is a party subject to an ongoing Liquids Product | Stabilization and Fractionation -- that is, LPSF -- | Processing Contract that pre-existed the regulation | of the McMahon Plant? |

83 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| MS. PEVERETT: Yes, we are. | | Q. And are you also generally aware | that as a result of the difference between the fee | prescribed by that pre-existing LPSF Processing | Contract and the LPSF tolls established by this | Board as a result of regulation of the McMahon | facility, any increases in the LPSF toll at the | McMahon Plant have a direct and adverse effect on | Petro-Canada? | | MS. PEVERETT: Yes, we are. | | Q. And you therefore understand that | the reason for Petro-Canada's concern over the | nature and the amount of the LPSF tolls is that | this has a potential effect on Petro-Canada's | bottom line. Correct? | | MS. PEVERETT: We do understand that. | | Q. It is this area that I would like | to explore with you this morning, this potential | effect with respect to the pre-existing contract | and the LPSF tolls that are established by the | Board. | | Westcoast has, as a part of its | Application for the Aitken Creek facilities, at Tab | 11 of the Application -- I will just let you get | there. | | In Tab 11 at Section 11.3, relating to | Estimated Toll Impact, you have prepared, as a part | of the Application for these facilities, your | estimate of the toll impact on Zone 1 and Zone 2 | service tolls as a result of the incremental | expenditures that will arise as a result of the | proposed Aitken Creek Plant. Correct? | | MS. PEVERETT: That is correct. | | Q. The Zone 2 tolls relate to | treatment, liquids recovery and LPSF. Is that | correct? | | MS. PEVERETT: Yes. Each of the three | is shown. | | Q. Am I also correct that as a result | of Westcoast's proposed treatment, the LPSF tolls | at McMahon will be impacted by the construction of | the proposed Aitken Creek facility. Is that fair? | | MS. PEVERETT: Based on the cost | allocation that we have included here, that would | be the case.

84 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | Q. Is it also correct that, in | general, the nature of that impact will be to | increase the LPSF tolls from the current levels at | McMahon? | | MS. PEVERETT: Yes, that is the case. | | Q. As part of Westcoast's evidence you | have prepared a table entitled "Estimated Toll | Impact Zone 2 LPSF", which is identified as Table | 11-10, Revision 1, in the documents that I have. | | Do you see that document? | | MS. PEVERETT: Yes, I have that in | front of me. | | Q. This Table represents Westcoast's | estimate of the effect of the Aitken Creek Plant on | LPSF Tolls. Is that correct? | | MS. PEVERETT: This is our best | estimate at this time, yes. | | Q. Am I correct, therefore, that | Westcoast estimates that as a result of the | construction and the integration of the Aitken | Creek facility, the LPSF Tolls will generally rise, | starting in 1995 to 2004? | | MS. PEVERETT: Given that the New | Aitken Creek Plant would be in service in 1996, | that would be the first year in which you would see | the impact of that plant. | | Q. Fair enough. And in 1996, the | first year of operation of the Aitken Creek | facility, it is Westcoast's estimate that the LPSF | Toll will rise approximately 82 percent, from $8.25 | to $15.17. | | Is that correct? | | MS. PEVERETT: Almost. $15.07. But | your percentage was correct. | | Q. Yes. I got the percentage right | from the line that you have given me here -- but I | see that it should be 15.07. Thank you. | | I would like to understand how | Westcoast arrived at this result and how it | justifies these results. In order to assist my | inquiry, I am going to be looking at some of the | exhibits that have been filed with respect to these | proceedings. I think it might be worthwhile to

85 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| alert you to them now, so that we can refer to them | as the questions arise. | | The first is Exhibit B-37, which is | Westcoast's Response to Petro-Canada Information | Requests, Numbers 1 and 2. | | Next, I am going to be referring to | Exhibit B-43, and that relates to the Undertaking | that was given to Petro-Canada by Mr. Thorneycroft, | at Transcript reference 742, when we were in Fort | St. John. | | Do you have that available to you? | | You may recall that that Undertaking | related to the Cabin Lake Booster Station. | | With that information in front of you, | I would like to talk first about the | functionalization of rate base. | | In order for my client to better | understand the LPSF projections that you have set | out in Table 11-10, Petro-Canada asked Westcoast to | provide the separate rate base calculations for | Liquids Recovery and for LPSF for McMahon and the | New Aitken Creek Plant. That was done by way of an | Undertaking. In your Answer to Question 2.5 of | Petro-Canada's IRs, in Exhibit B-37, you purported | to respond to that Question -- which is the last | page of your Response to that Information Request. | | You have provided a Table representing | the combined plants which relate to | Functionalization of Ratebase for Liquids Recovery | and for Fractionation/Stabilization. | | Is that correct? | | MS. PEVERETT: Yes, that is correct. | | Q. That is the page at the back of | that document. And the dollar amounts on this | Table are representative of Westcoast investment in | both McMahon and the New Aitken Creek Plant. | | Is that correct? | | MS. PEVERETT: From the year 1996 on, | that is correct. | | Q. Thank you. Now, if we look at the | Gross Plant numbers for Liquids Recovery in the top | half of that diagram, the first top line, we see | that in 1994 the value for the Gross Plant is | $41,898,000; and then in 1995, it is $43,261,000.

86 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Now, by 1997, after the completion of the Aitken | Creek Plant, that amount increases to $122,258,000. | | Is that correct? | | MS. PEVERETT: Yes, it is. | | Q. And if you look just at the | increase between 1995 and 1997, you will see that | that amounts to an increase of about $79 million. | Subject to your arithmetic, my arithmetic says | $78,997,000. So just about $79 million is the | difference between '95 and '97. | | Correct? | | MS. PEVERETT: Seventy-nine million is | very close. | | Q. Okay. And having regard to your | earlier answer with respect to the in-service date | of Aitken Creek, can you confirm for me that this | increase is mainly due to the establishment and | operation of the Aitken Creek Plant? | | MS. PEVERETT: Yes, it is. | | Q. Now if we look below at the | Fractionation/Stabilization numbers that are in the | bottom part of that chart, and we look at Gross | Plant again, we see that in 1994 the dollar value | is $12,815,000; and by 1997, that increases to | $50,142,000. | | Correct? | | MS. PEVERETT: Correct. | | Q. And if we focus on the difference | in these amounts between 1995 and 1997, we see an | increase of about $13 million? | | MS. PEVERETT: Thirty-seven, I think. | | Q. Yes. I am just doing my arithmetic | here. $36,883,000. So we see an increase of | approximately $37 million, from the $13 million | approximately in 1995 to the $50 million in 1997. | | Correct? | | MS. PEVERETT: Yes, that is right. | | Q. So is this $37 million increase | also principally attributable to the Aitken Creek | Plant? |

87 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| MS. PEVERETT: Yes, it is. | | Q. So would you confirm, having regard | to those two increased numbers, that the total | project cost for the New Aitken Creek Plant, which | is forecast at $265 million, the liquids-related | facilities (that is, for the Liquids Recovery, | which we just looked at in the top part of the | chart) and for the Fractionation/Stabilization, | which difference we looked at in the bottom part of | the chart, that those amounts, the $79 million plus | the $37 million, represent $116 million of that | $265 million cost? | | MS. PEVERETT: Yes, I can confirm that. | | Q. And subject to doing the arithmetic | yourself, this represents about 44 percent of the | proposed total costs for that facility. | | Is that correct? | | MS. PEVERETT: Yes, it does. | | Q. Is that a relatively high amount | for those two types of services -- 44 percent of | the total cost? | | MR. MAAS: Relative to what? I guess | it all depends on what has to process, what the | parameters of a particular process requirement are. | | So I am not sure what you mean by | "relative". | | Q. I guess, Mr. Maas, relative to your | general experience with respect to gas processing | plants. | | Isn't this a substantial amount | compared to your other operations? | | MR. MAAS: Yes, I would say so. | | Q. Thank you. I would like to look at | those costs in relation to what we learned about at | Fort St. John, which is the proposed Cabin Lake | Booster Station. | | Do these costs that we have just talked | about with respect to Liquids Recovery and | Fractionation/Stabilization include an increase in | costs associated with the proposed Cabin Lake | Booster Station? | | MS. PEVERETT: No, they do not. |

88 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Q. That booster station is proposed to | be located in the Fort Nelson area. | | Is that correct? | | MS. PEVERETT: Yes, it is. | | Q. And in relation to the undertaking | that we received from Mr. Thorneycroft, he provided | us with a description of facilities that would be | built in relation to that booster station. I am | looking at page 1-2 of Exhibit B-43, which is his | response to the Undertaking he provided to me. I | am looking in particular at the section entitled | "1.2.2 Liquid Handling Facilities". | | Are you with me? | | MS. PEVERETT: Yes, we have that. | | Q. It states there that the applied- | for liquids handling facilities include a | separator/slug catcher -- which I thought was an | occupation, not a piece of equipment; a | stabilization unit, an overhead vapour recovery | system, and stabilized condensate storage | facilities. | | Now have these facilities in fact been | approved by this Board? | | MS. PEVERETT: Yes, they have. | | Q. And these represent additional | liquid handling facilities. Correct? | | Perhaps I can help you there: | additional to the facilities that we have discussed | in relation to the Aitken Creek Plant. | | MR. TUBB: I am not sure exactly what | you mean by "liquids facilities". Certainly, these | facilities relate to liquids in the Fort Nelson | Gathering System. | | Q. Mr. Tubb, there are no surprises | here. I am simply trying to understand the | ultimate effect that these costs are going to have | with respect to LPSF tolls. I am trying to | understand how they fit into your calculation of | the proposed tolls. I understand from your answers | so far that although these relate to liquids | recovery functions, they have not been included in | the discussion and the functionalization of rate | base that you prepared in response to Petro- | Canada's IR. So I am trying to understand how they | might affect those calculations that were provided

89 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| through your Response to our Information Request. | | Does that help? | | MR. TUBB: Yes. | | Q. In general, though, these are | described as liquids handling facilities. Correct? | | MR. TUBB: Yes, that is the title of | this section. | | Q. And on page 7-2 of Mr. | Thorneycroft's Response to me he estimates the cost | of the liquids handling facilities. He estimates | that cost to be around $9.2 million. Is that | correct? | | MR. TUBB: Yes. | | Q. Now this is what I was getting at | with respect to my previous question: Has this | amount been included in the rate base calculations | relating to the functionalization of rate base for | Liquids Recovery and Fractionation and | Stabilization that we just discussed and which | Westcoast provided in response to Petro-Canada IR | 2.5? | | MR. TUBB: No, they are not in those | numbers. |

| | | Q. Can you tell us when and where | these costs for this facility will be | functionalized? | | I can probably make that easier by | simply asking you: Will they be functionalized as | LPSF? | | MR. TUBB: That has not been finalized | yet. We are still reviewing the function of these | facilities to see if all or a part of them are | appropriate to include in the LPSF service. We are | certainly considering that as a possibility. | | Q. Then, given that answer, I would | like to explore that consideration; that is, the | functionalization of these costs as part of LPSF, | if I could. I understand that you have not reached | a conclusion with respect to this, but having | regard to your thought process, that might be | beneficial in trying to help us assess the ultimate | impact of such a functionalization.

90 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | Can you work with me on that basis, Mr. | Tubb? | | MR. TUBB: We can take it as far as we | can take it, certainly. | | Q. Okay. Well, I understand that as a | rough rule of thumb the cost of service impact can | be approximated as 20 percent or perhaps 25 percent | of the capital cost. | | Would you agree that that is a rough | estimate? | | MS. PEVERETT: 20 percent is a rough | estimate, yes. | | Q. Okay, let us take 20 percent. For | purposes then of such a rough estimate, if the | capital cost of these liquids handling facilities | is $9.2 million, as indicated in Mr. Thorneycroft's | Response, then would you agree that these | facilities have an annual cost of service of | approximately $1.8 million, at 20 percent? | | MS. PEVERETT: Yes, that would be | correct, given that rule of thumb. | | Q. All right. And given this annual | cost of service amount, can you tell me what impact | these costs will have on Westcoast's estimates for | the LPSF tolls? | | MS. PEVERETT: Well, we are having some | difficulty with this because we do not have the | allocation units that would be included with the | additional costs. | | Q. Okay. Directionally, it would have | the effect of increasing the tolls. Is that fair? | | MS. PEVERETT: Unless the increased | cost of service was offset by increased allocation | units. | | Q. As the costs for this booster | station have not been included in your estimates | for LPSF tolls, perhaps I could ask you to | undertake to provide that information in those | estimates, if you would not mind. | | Could you do that for us? | --- (A Short Pause) | Q. I am full of help today. I may | hopefully be helpful in that regard. Mr. | MacPherson has drawn to my attention that in order

91 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| to try and understand the net impact that would be | associated with all of these facilities, he did | some rough estimates with respect to winter and | summer volumes and allocation units that he derived | using Mr. Thorneycroft's Evidence -- and I refer | you to page 5-5. | | What he looked at was the basis of the | volumes, and he looked at stabilized condensate. | You will see down there the figures of 990 barrels | per day maximum during winter conditions; 830 | barrels per day maximum during summer conditions. | He then converted those into cubic metres per day | and used those with respect to an allocation. | | Does that assist you with respect to | the question relating to the LPSF impact? | | MR. TUBB: That assists in terms of the | assumptions that you would like us to make on the | allocation units. I think, as I said, we are not | at the end of our deliberations as to the | allocation of these liquids costs themselves in | terms of which might be appropriate to include in | LPSF, and that is the other part of the equation, | and that could make a significant difference. | | Q. I understand that. I understand | you have not reached the end of your deliberations. | But you must understand that we are looking at a | vacuum here, a vacuum with respect to the potential | effect; that we have had to go to Westcoast's | information where we can find it to try and | determine what the effect would be, and that is why | we have gone to Mr. Thorneycroft's Evidence, to try | and determine what would be an appropriate | allocation factor associated with these. | | Based on that Evidence, as being the | best evidence that we certainly have available, we | assumed that that would be an appropriate way to | proceed. And therefore we would ask you: If that | is not, to inform us why not, and provide us with | your assumptions and provide us with your | calculation. If it is correct, we would ask you to | prepare the calculation on the basis of the | evidence contained in Mr. Thorneycroft's Response. | | Is that fair? | | MR. TUBB: Sure. We will undertake to | review this material and your desired assumptions | and respond with some estimates. | | Q. Then you understand that the reason | we need this is to determine what the potential | effect on the LPSF toll is going to be, correct?

92 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | MR. TUBB: Yes. | --- UNDERTAKING: | To provide further detail re impact of | additional facilities on LPSF Tolls. | | MR. MILLER: | Q. Thank you. Now finally with | respect to functionalization, I believe that on | Monday, in your discussions with Mr. Bursey, and on | Tuesday in your discussions with Mr. Johnson, you | gave an undertaking to describe the process of how | capital costs are functionalized between the three | toll functions of treatment, liquids recovery, and | LPSF. | | Is that correct? | | MR. TUBB: Something along those lines. | I think there were some specific questions as to | ratios that were used to allocate costs and which | line items of cost of service those ratios were | applied to. | | Q. That is correct. We have seen the | response you have given to Mr. Bursey. Do you | still have an undertaking outstanding with respect | to Mr. Johnson's request? | | MR. TUBB: Yes, we do. | | Q. Okay. Well, Mr. Tubb, as I | indicated to you yesterday, Petro-Canada is | interested in this cost allocation process as well; | and if you have not already provided that | information to Mr. Johnson, could you provide a | description in your Response of how the cost of | each of the main process units at the Aitken Creek | Plant was functionalized. | | In other words, for the proposed $265 | million of expenditure, can you identify | Westcoast's cost breakdown and how those amounts | were functionalized? | | MR. TUBB: We could do that now | verbally, if that would of assistance. | | Q. Yes, that would be helpful. Thank | you. | --- (A Short Pause) | Q. I am ready, Mr. Tubb, if you are. | | MR. TUBB: As I was mentioning the | other day, the general approach that we have | currently in place, the methodology, is that to the | extent we can identify the capital related to the

93 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| various functions that are performed at McMahon and | Existing Aitken Creek, we are proposing to extend | that approach to New Aitken Creek, or at least that | is the assumption we have made in providing these | toll impacts. That requires some judgment on the | part of the engineers essentially as to the primary | purpose of a piece of equipment or whatever the | capital facility may be. | | In extending that methodology, what we | did was we reviewed with the engineers the cost | estimates for the New Aitken Creek Plant and, to | the extent possible, identified particular portions | of the capital expenditures, pieces of the $265 | million, with various functions. | | The plant estimates at this point are | at a not very desegregated level, if I could put it | that way. | | Q. Are you calling that a gross level; | that they relate grossly to the functions but do | not relate to specific pieces of equipment? | | Is that what you mean by -- | MR. TUBB: That is right. The cost | estimates are grouped in fairly wide-ranging | categories, and we did not have enough detail to go | below that level. | | The categories that were identified | were, starting at the inlet of the plant: inlet | facilities, sweetening, dew point control, sulphur | plant, tail gas treatment, and fractionation. So | we had six categories, or units, to use as the | phrase that the cost estimators used. | | Q. So that is the scope or nature of | what you have done so far with respect to | functionalization -- is identify those six areas | and assign costs with respect to those six areas? | | MR. TUBB: That is right, and the costs | assigned to each of those six units totalled | roughly $131 million, which is something in the | neighbourhood of about 50 percent of the capital | cost of the plant. | | Q. All right. Now given those six | areas that you have identified, can you tell me, of | that $131 million, what proportion was assigned to | each of those functions? | | MR. TUBB: For the inlet facilities, | $7.1 million was assigned to treatment. | Sweetening; $43 million -- and I would qualify | that. That was assigned to treatment. That $43

94 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| million includes $21 million from the Dew Point | Control Unit. | | That, as I was explaining the other | day, we felt was an added cost of the turbo | expander. That was primarily for the purpose of | meeting the sulphur specs. So that $21 million was | allocated to sweetening. | | Q. So $21 million out of the $43 | million for sweetening was allocated to treatment. | | MR. TUBB: That is right. So if you | back that out, there was $22 million, roughly, for | sweetening and then another $21 million from Dew | Point Control was added to that. | | Also in treatment were the sulphur | plant, at $11.8 million, and tail gas treatment at | $4.1 million. | | Q. And I am waiting for the big one. | | MR. TUBB: That is the end of the | treatment. | | Q. Fractionation...? | | MR. TUBB: Liquids recovery -- or do | you want fractionation before liquids. | | Q. Just tell me the amount for | fractionation -- that was one of the identified | functions -- and where you allocated it. | | MR. TUBB: Fractionation was $6.5 | million, and that was in LPSF. | | Sorry, I was running down a column here | and skipped one. There actually is another. There | was stabilization. There was a stabilization unit | separately identified. Sorry, I missed that | originally. And that was $15.1 million. So that | also was allocated to LPSF. | | Q. So LPSF includes the fractionation | amount of $6.5 million? Sorry... | | MR. TUBB: That is correct. | | Q. And the stabilization also includes | $15.1 million that goes to LPSF. Is that correct? | | MR. TUBB: That is correct. | | Q. I was trying to follow along, as | you indicated that, by having regard to the Figure

95 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| 6-1 which was contained in the Application, which | is a Process Block Diagram for the proposed New | Aitken Creek Plant. | | When I did that, Mr. Tubb, I noted that | there were a number of functions within that | Process Block Diagram that were not mentioned in | the six categories, the six functions that you | indicated. Those are presumably the detail of the | gross areas that you described as part of your | functionalization process. | | It would be helpful, sir, if you could, | utilizing this Block Diagram, Figure 6-1, identify | those six areas and the portions of that process to | which those costs are assigned. | | Can you do that for me, sir? | | MR. TUBB: Right now? | | MR. MILLER: No, not right now. You | can do it by way of an Undertaking. | | MR. TUBB: Yes. I believe I would have | to do that, because I would have to get back to the | Engineers to see where they fitted everything in. | | MR. MILLER: You understand my problem. | I am trying to follow your process diagram. You | have given me six functions, but I do not know | which of those six functions include which | particular portions of the process as identified in | this diagram. | | MR. TUBB: Yes. | | MR. MILLER: Thank you. If you would | do that by way of an Undertaking, I would | appreciate it. | --- UNDERTAKING: | To identify the six areas and portions | of the process to which costs are | assigned on Process Block Diagram, | Figure 6-1. | | MR. MILLER: | Q. Now, sir, I want to talk to you | about Westcoast's assessment of the benefits, or | lack of benefits, associated with C3 and C4 | production; that is, the propane and butane | production. | | I am going to refer you to | Exhibit C-36-3, which is Petro-Canada's Information | Request to Westcoast, and your Response to that | Information Request, which I mentioned earlier is

96 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Exhibit B-37. | | In our Information Request, we set out | two diagrams which are entitled "Fort St. John | Liquids Handling". Actually, they are not | diagrams. I should properly refer to them as | Tables which were attached to our Information | Request. |

| | | MS. PEVERETT: We have to get our hands | on your original Information Request. | | MR. MILLER: It is Exhibit C-36-3. | --- (A Short Pause) | Q. I want to take you to Attachments | 1.6A and 1.6B of that Information Request. Those | are the charts that exist there. | | Have you found those? | | MR. TUBB: Yes. | | Q. Okay. My first question is quite | simple: Do you recognize the form of those charts? | | MR. TUBB: Yes. | | Q. And where did that form come from? | | MR. TUBB: This was information | presented to Fort St. John shippers at the November | meeting in Calgary. | | Q. This is information that Westcoast | provided to the shippers as a part of an | information meeting that they held in relation to | the Fort St. John Expansion. | | Correct? | | MR. TUBB: That is correct. | | Q. All right. And those Attachments | show Liquids Recovery and LPSF Tolls for the year | 2004 expressed in 1994 dollars. | | Is that correct? I think that is 1.6B. | | MR. TUBB: Yes, it is. | | Q. And this was a forecast that was | prepared by Westcoast to help the shippers | understand the potential effects and costs | associated with liquids handling and to assess the

97 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| net benefit of propane and butane production at the | facility. | | Is that fair? | --- (No Response) | Perhaps you could tell me the purpose, | then? | | MS. PEVERETT: This was provided as | information as to why we had made the decision to | re-inject the C3, C4 rather than to have it produced | for sale. | | Q. And in your Response to Petro- | Canada's Information Request, in the first sentence | of your Response you say that: | "Attachments 1.6A and 1.6B of your | Request are not copies of an economic | analysis undertaken by Westcoast." | As Mr. Tubb has just indicated, it is in fact | information provided by Westcoast to the shippers. | | Is your objection here to the | characterization of this as an economic analysis? | | MS. PEVERETT: We were just trying to | clarify it was not intended to be an economic | analysis as much as it was intended to be an | explanation as to why we had made the decision we | did. | | Q. But presumably as an explanation | for making the decision it was based upon an | analysis. Correct? | | MS. PEVERETT: Yes, it was. | | Q. Are you saying that this is not | representative of that analysis? | | MR. TUBB: Let me just expand on what | has been said. | | This was presented to the meeting to | give people a feel for what was happening with | current prices with respect to liquids products, | and particularly the C3,C4. This indicates the | contribution of the C3,C4 under a particular toll | scenario -- which is no longer the one that is in | the Application. In fact, it never was in any | application. It was revised after this meeting. | But this was presented at the end of the meeting | just to illustrate to shippers the situation that | would exist with respect to C3,C4 in particular when | it came to the contribution; kind of a check of | what we had described we had gone through. |

98 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| But the fundamental basis for the | conclusion that C3,C4 was best reinjected was to | review the total value of the products that would | be produced, to look at the dollar value per | gigajoule of residue gas, taking into account that | there would be more gigajoules available with | reinjected versus the value of C3 and C4 if sold as | product. | | So it was a revenue-based approach as | opposed to a contribution-based approach. | | Q. Mr. Tubb, I believe I understand | what you are saying. You are saying that you went | through an exercise to try and demonstrate why the | recovery of liquids, in particular propane and | butane, did not merit an investment in certain | facilities at the Aitken Creek Plant. | | Is that fair? | | MR. TUBB: That is correct. Our | conclusion was that the revenue available to | shippers, the net revenue available, would be | higher if we did not make the investment in the | facilities necessary to fractionate the C3 and C4. | | Q. And in reaching that conclusion you | had regard to at least an analysis of what you were | likely to recover and what you could presumably | sell that recovered product for in relation to | these facilities. Correct? | | MR. TUBB: That is correct. | | Q. And this document, which you | provided to shippers, is a document that you used | to illustrate that concept and to explain your | conclusion. But if I understand you correctly, | this document has no longer any validity because | you have re-done the analysis? | | MR. TUBB: No, it is not that it no | longer has any validity. It is a matter that it is | not the analysis per se. It was I think what was | felt to be a useful way to present the overall | liquids situation, an indication that C5-plus | certainly would provide a positive contribution; | that C3 and C4 were getting to be borderline. But | at the end of the day, the decision was not based - | - I think the point I am trying to make is that the | recommendation that we reinject the C3, C4 was based | on the value of a residue gas gigajoule in relation | to a C3 or C4 gigajoule. | | Q. Here is my dilemma, Mr. Tubb. You | have indicated that you have come to a conclusion

99 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| that it will not pay to produce commercial spec | propane and butane at Aitken Creek. | | Correct? | | MR. TUBB: We have come to the | conclusion that we will pay more to produce residue | gas than to produce C3/C4. | | Q. Fine. If we express it as the | corollary, that is fine. The problem I have is, I | do not understand how you reached that conclusion | when you tell me that you provided this information | to the shippers but now this does not represent the | underpinning study, or at least it does not | represent your latest thoughts with respect to the | underpinning study. | | That is my dilemma, sir. | | Have you got a study that supports your | conclusion? | | MR. TUBB: We have some numbers. We | have the calculations that we did to arrive at that | conclusion. | | Q. Can you provide them to us, sir? | | MR. TUBB: Yes, we can do that. | --- UNDERTAKING: | To provide the calculations and cost | assumptions behind the conclusion that | it is better to re-inject C3 and C4 than | to produce commercial spec propane and butane. | | Q. Thank you. Now, in the second | paragraph, in response to IR Question 1.6, you | state: | "Having regard for our qualitative | assessment of the costs of producing C3 | and C4 product and of product values, it | was concluded that the contribution to | be realized from the sale of the C3 and | C4 products would not provide shippers | with as much value as would be provided | by re-injecting the liquids back into | the gas stream and increasing the | heating value of the gas." | Correct? | | MR. TUBB: Yes, that is what it says. | | Q. What is the difference between the | qualitative assessment of costs and the document | that you are going to provide me as part of your

100 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| Undertaking? | | MR. TUBB: There is no difference. The | use of the word "qualitative" I think is misplaced | in this instance. | | Q. I have a number of questions, sir, | that relate to some of the assumptions that were | appearing in this document -- but it seems to me | that we had best wait until we see what in fact you | utilized to reach this conclusion. Therefore, | would you provide us, as part of that Undertaking, | with any of the assumptions that you made with | respect to costs. | | Is that fair? | | MR. TUBB: Which costs in particular | are you thinking of? | | Q. You undertook to provide me the | study that supports your conclusion that it is | better to re-inject than to produce commercial | grade propane and butane. All I want to make sure | is that we have all of the information as part of | that undertaking, including any assumptions that | you utilized. | | MR. TUBB: Certainly. | | Q. Thank you. If Aitken Creek is | approved, Westcoast still intends to produce | commercial grade propane and butane at the McMahon | plant. | | Is that correct? | | MR. TUBB: Yes. | | Q. Okay. Given the forecast increase | in Liquids Tolls -- that is, both the Liquids | Recovery Toll and the LPSF Toll -- which is going | to occur after the completion of Aitken Creek, and | given the inclusion, potentially, of the Cabin Lake | facilities as part of those tolls, and those | liquids costs, can you indicate whether you have | examined whether the production of propane and | butane at the McMahon Plant will continue to add | value and make sense to sell commercial propane and | butane, rather than to inject those liquids into | the gas stream there? | | Basically, I am asking: If you have | done the analysis for Aitken Creek and reached a | conclusion, have you done the same analysis having | regard to the new costs and the new influence of | those tolls in relation to the production or re-

101 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| injection of those liquids at McMahon? | | MR. TUBB: The thrust, I think to put | it in the context of what we were looking at here, | was a decision as to whether the New Aitken Creek | Plant should include facilities for that final step | of fractionating the C3, C4 into C3 and C4 products. | | That is an investment that has yet to | be made, and so it is avoidable if the net result | of it is not of additional value to shippers. | | Q. But surely -- sorry, Mr. Tubb, I | did not mean to interrupt. | | MR. TUBB: I was just pointing out that | given that we already have the capability of | producing the C3 and C4 product at McMahon --- | I think it is a different question | there. It is a question of whether you stop | producing the product and reinject it, but it is | not a question of an investment decision. | | Q. It may not be a question of an | investment decision of Westcoast, but you have | increasing tolls which are changing the picture, | and therefore it becomes a very fundamental | question with respect to the shippers in relation | to the benefit. And my question is simply this: | If you have done that analysis to determine that | there is a benefit in reinjecting the liquids at | Aitken Creek, and you feel that that has some | validity in relation to the purpose and the nature | of the facilities that you are going to build | there, surely, given that you are going to change | the tolls, you would make that similar analysis | with respect to the existing circumstances. | | Is that not fair? | | You are going to change tolls. It is | going to have an effect. If you do not believe | that it is merited to produce propane and butane at | Aitken Creek because of the benefit that it | attracts, surely you would look at that in relation | to the existing facilities, having regard to the | changes that are going to occur. | | Would you not? | | MS. PEVERETT: I think the decision is | somewhat different. The decision we made at New | Aitken Creek was a decision not to produce the C3, | C4 separately, and not to spend the additional $12 | million. That is different from the decision that | would have to be made to continue or not to | continue to produce them at McMahon.

102 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | Q. Either it is a valid concern that | you are not going to get sufficient recovery from | liquids handling by fractionation at Aitken Creek | or it is not, and it seems to me that that | fundamental question applies equally to McMahon. | | You do not think it does. | | MR. MAAS: Other than the fact that we | were looking at new facilities and whether we | should build them at Aitken Creek, the other issue | is, of course, the transportation costs to get to | market from Aitken Creek is considerably higher | than from McMahon. | | So that was part of the consideration | in asking the question: Does it make sense to | fractionate these products at Aitken Creek? | | Q. I understand that, Mr. Maas -- and | maybe I am particularly dense, but it seems to me | that either it is economically valid to produce | these materials or reinject them at Aitken Creek | and that that determination is as equally important | with respect to existing facilities as it is at new | facilities. | | Surely you would not operate facilities | that are not contributing appropriately to the | operation of the gas plant. | | MR. MAAS: I think we have to operate | them. It is a question of how one allocates the | costs. | | Q. And that is my question. You have | done an analysis with respect to allocation and you | have reached a conclusion which is modified --- | You have done an analysis with respect | to their contribution at Aitken Creek. That has | affected your decisions with respect to allocation. | All I am suggesting is: Would it not be prudent to | do the same at McMahon? | |

| | | MS. PEVERETT: I think it is fair to | say that we need to continue to look at the | allocation of these costs. We have not reached our | final decision on cost allocation. We have reached | a final decision as to whether or not to invest the | extra $12 million. | | Q. If you determined, when you looked

103 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| at McMahon, that it was not economic or there was | not a contribution being made by the production of | commercial product, would you discontinue that | operation at McMahon. | | MS. PEVERETT: I do not believe we are | able to discontinue the operation. What we may | have to do is ask the Board to reconsider the | method of allocating the costs between the various | functions that we perform. | | Q. When you say you do not think you | can discontinue the operation, is that because it | is required for another purpose? | | MR. MAAS: We require the operation at | McMahon, as we do at Aitken Creek, to obtain | pipeline quality gas. | | Q. So you require the LPSF function at | McMahon as part of the process of providing | pipeline spec natural gas. Correct? | | MR. MAAS: That is correct. | | Q. Fair enough. I would like to ask | you about allocation of the Aitken Creek costs. | | In your Response to Petro-Canada's IR | 1.7 -- which I think you have in front of you, | still contained in that Exhibit B-37 -- you state | that the cost allocation and rate design issues | related to liquids functions should be examined at | a subsequent toll application when Westcoast | applies to include these facilities in rate base. | | Correct? | | MS. PEVERETT: Yes, that is what it | says. | | Q. Given that these facilities at | Aitken Creek are scheduled to go into service at | midnight on August 21, 1996, what toll hearing are | you suggesting should look at the question of these | tolls? | | MS. PEVERETT: I think the appropriate | toll hearing would be the 1996 Tolls Application. | | Q. Well, here is our dilemma: Your | Application for these facilities indicates that you | are outlining a proposed toll methodology and an | impact analysis of those tolls in order to support | your application for these facilities before the | Board; but in your response to Petro-Canada's IR | you say that tolls will not be an issue until the

104 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| toll hearing. | | You can understand how that is | problematic, can you not? | | We have the cart before the horse. We | are saying "this is how we are going to toll these | matters, and this is the impact based upon how we | are going to toll these, but this will not be | decided until the Toll Hearing". | | MS. PEVERETT: We are not asking for | approval of the cost allocation methodology, nor of | the tolls with liquids recovery and LPSF. We are | merely asking for the Certificate to build the | facilities. We have provided the cost allocating | and the tolling information as indicative of where | our current thoughts might lead us, but they are | not final proposals at this point in time. | | Q. So these suggestions that you have | made with respect to tolls and toll impact, those | should not be in any way binding upon this Board | with respect to setting the final tolls for these | facilities. Correct? | | MR. MAAS: We are asking the Board -- | when we talk about facilities, the overall | facilities -- to approve those on a rolled-in | basis. With respect to the tolling for LPSF -- I | think that is what you were discussing with Ms. | Peverett. Certainly, in terms of the cost | allocations related there, that would be a subject | for a toll proceeding. | | MR. MILLER: Thank you, Mr. Maas. I | have, Madam Chair, approximately 15 further | questions. We are now at one o'clock. I am in | your hands. | | THE CHAIRMAN: How long do you believe | you would need? | | MR. MILLER: I expect that we could | finish reasonably within 20 to 25 minutes, Madam | Chair. | | THE CHAIRMAN: Mr. Miller, I think we | will ask you to come back tomorrow. | | MR. MILLER: Thank you, Madam Chair. | | THE CHAIRMAN: Thank you, ladies and | gentlemen. We will reconvene at 8:30 tomorrow | morning. | | Mr. Dickson...?

105 of 106 NEB/ONÉ-Hearing Transcript-Transcription d'audience-GH-5-94 GH-6-94-Volume 11

| | MR. DICKSON: If I could just slip in | before we adjourn here, I would like to make a | filing. | | You will recall that we made an | Information Request to the National Energy Board | asking them questions about safety coordination and | inspection on the site. We just received that this | morning. The document is dated February 17th, but | it just reached us this morning. | | I would like to enter that as an | exhibit. | | THE CLERK: That will be Exhibit No. C- | 2-13. | --- EXHIBIT NO. C-2-13: | NEB letter dated 17 February 1995 | addressed to Michael E. Coppock, BCYT- | BCTC re WEI Pine River Plant and | Grizzly Pipeline System Expansion. | | MR. DICKSON: And just before I | distribute that, it answers another question. We | had indicated before that we wanted to reserve the | right to recall Panel 1 based on this information. | The information makes it clear that there was no | safety supervision or inspection of any kind from | the National Energy Board, and as a result of that | we do not feel that there are any questions arising | as to the details of what inspection or supervision | took place. | | So at this point we can withdraw that | indication of a possible interest in recalling | Panel 1. | | THE CHAIRMAN: Very well, Mr. Dickson. | Thank you, ladies and gentlemen. We stand | adjourned until 8:30 tomorrow morning. | --- Adjournment

GH-5-94 GH-6-94 - Volume 11 Index for all transcripts / Indice des transcriptions d'audiences Index for this transcript / Indice de la présente transcription d'audience previous volume précédent next volume suivant

106 of 106