Canadian Pipeline Projects
TransCanada (TSX: TRP) Lands Two LNG Pipelines
TransCanada Corp. (TSX: TRP) may not be getting any love in the United States, but its home nation of Canada is more than making up for that.
The company behind the proposed Keystone XL Pipeline, still awaiting approval for a Presidential Permit more than two years after receiving approval in Canada, is moving ahead much more quickly with projects in Canada.
Last week TransCanada announced it had been chosen by the Canadian arm of Malaysian company Petroliam Nasional Bhd (Petronas) for the Prince Rupert Gas Transmission project, an LNG pipeline worth roughly $6.58 billion.
The pipeline would move LNG from British Columbia's Montney shale deposit to Progress Energy Canada's planned export facility in Port Edward.
Progress Energy Canada, formerly known as Progress Energy Resources Corp., was acquired by Petronas for $5.28 billion at the end of last year.
Its export facility is the latest effort from Canada to ship LNG to Asian customers after exports to the U.S., one of its biggest customers, were slowed amid the U.S. shale boom. The facility will cost roughly $11.2 billion.
TransCanada's pipeline will have an initial capacity of 2 billion cubic feet of liquefied natural gas per day, expandable to 3.6 billion cubic feet per day.
The pipeline itself will cost roughly $5.1 billion, but TransCanada will spend up to an additional $1.5 billion on connecting it to its NOVA regional pipeline network.
Once the Prince Rupert Project is connected to NOVA, it will have access to other areas in the Montney shale as well as Alberta gas deposits.
This project is good news for a company that has been struggling with the postponement of the Keystone XL decision in the U.S.
TransCanada expects to get continued support from British Columbia communities. “Recently we have built about C$1 billion of infrastructure in northeast B.C.,” Russ Girling, TransCanada's chief executive, said in an interview. “Our process of community engagement and consultation has worked well for us and I believe those communities trust us.”
Construction will get underway once Progress and TransCanada finalize the details, and the Prince Rupert Gas Transmission Project should be complete by 2018.
But this isn't the only project TransCanada will be working on in the region. In June last year, the company was selected for another LNG pipeline.
Coastal GasLink, worth $4 billion, will bring LNG to a Kitimat, British Columbia export terminal proposed by Royal Dutch Shell Plc (NYSE: RDS.A), Mitsubishi Corp. (TYO: 8058), Korea Gas Corp. (KRX: 036460), and PetroChina Co. (NYSE: PTR).
“It looks like TransCanada is going to be the builder of choice to get gas to the West Coast, with two pipelines running two separate paths, one to Prince Rupert and one to Kitimat,” said Steven Paget, an analyst at FirstEnergy Capital Corp. in Calgary.
Between the two pipelines, TransCanada will have plenty to keep it occupied regardless of how the Keystone XL decision plays out. The company is still looking forward to a positive decision on the Keystone project, but these two pipelines will give the company security.
TranCanada shares rose 2.41% to close at $48.39 last Wednesday when the company made the announcement. Shares were at $48.37 on Monday afternoon.
That's all for now,
Energy & Capital's modern energy guru, Brianna digs deep into the industry with accurate and insightful updates into the biggest energy companies and events. She stays up to date with the latest market moves and industry finds, bringing readers a unique view of current energy trends.
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