Pipeline company TransCanada Corp is offering tolls as low as 82 Canadian cents per gigajoule on its natural gas mainline from western Canada if enough producers sign up to long-term contracts, a company executive said.

Stephen Clark, TransCanada’s senior vice president for Canadian natural gas pipelines, said cheaper tolls are crucial if companies in areas like the Montney and Duvernay shale plays are to compete with US gas producers in eastern markets.

The new toll would be a 42 per cent cut from the current shipping price of roughly C$1.41 a gigajoule to go from Alberta and British Columbia to markets in Ontario, and depends on customers signing up to 10-year contracts to ship at least two petajoules of natural gas in total on the line.

Clark said the boom in US shale, in particular the Marcellus play in Appalachia, meant more natural gas was flooding into the southern Ontario market and displacing traditional western Canadian supply.

While the remote Montney and Duvernay gas plays can compete with US shale on cost of production, their greater distance from market increases delivery costs and the price of western Canadian gas in Ontario.

"If that market starts to acquire gas from other basins, they will essentially forgo western Canadian supply," Clark said.