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Providing natural gas to Albertans involves four major steps:

  • Production
  • Transmission (pipelines)
  • Distribution
  • Retail

    Production
    Once a potential natural gas deposit has been located underground by a team of exploration geologists and geophysicists, drilling experts will drill a well to extract the natural gas. Once extracted, the producers remove by-products such as ethane, propane and butane from the natural gas. The natural gas is then collected by small pipelines, called gathering systems, which feed into large transmission pipelines.

    Producers can sell natural gas to marketers, natural gas retailers or directly to industrial companies. Regulated and competitive retailers purchase gas from producers and sell it to Alberta consumers.

    Transmission (pipelines)
    Natural gas transmission lines are high pressure lines that transport natural gas from the well or processing plants to distribution systems. AUC approval is required to construct transmission pipelines in Alberta.

    Under the Gas Utilities Act the AUC also has the responsibility to approve Transmission tariffs that recovers the cost of the transmission pipeline owner to transport natural gas.

    Distribution
    Distribution pipelines are low pressure lines (less than 120 psi) that deliver gas received from the transmission pipelines directly to customer homes or businesses. This natural gas is sold to the end customer by a retailer.

    The AUC approves the distribution rates for investor-owned distribution systems to ensure that they are just and reasonable. Distribution charges for other distributors are set by the applicable regulator - by municipal councils with respect to some municipally owned utilities and by the elected board members of natural gas co-operatives. Distribution rates recover the cost to the distributor to build, maintain and operate the distribution system.

    Retail
    Natural gas retailers purchase natural gas from the producers and then sell the natural gas they have purchased to consumers, either at the regulated rate or under contracted terms. Consumers that have not signed a competitive contract will automatically receive service from the regulated rate provider that is available in their area. The regulated rate is regulated by the AUC, while the AUC has no jurisdiction over competitive retailers. Click here for more information on retail rates and tariffs.