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TransCanada Envisions Mainline Leg Transporting More U.S. NatGas to Canada

Imports from the United States into Ontario and Quebec are expected to rise by up to 20% when TransCanada Corp. completes the next addition to the eastern legs in its natural gas Mainline in November 2017.

"The project will provide the market with greater flexibility and access to emerging supplies from the Marcellus and Utica [U.S.] shale regions," said TransCanada's construction application to the National Energy Board (NEB).

A dozen distribution companies and high-volume consumers in Ontario and Quebec have signed 15-year contracts for deliveries of 425,081 gigajoules/day (400 MMcf/d)  on the proposed Vaughan Mainline Expansion, TransCanada reported. The expansion's C$221 million ($166 million) price tag includes installing 42-inch diameter pipe to enable more gas imports with quick low-cost additions of compressors.

The Vaughan project, named after its location by a satellite city on the northern fringe of Toronto, matches capacity additions underway on the Enbridge and Union Gas distribution networks in eastern and southwestern Ontario. Shippers committed to the Vaughan expansion include Quebec distributor Gaz Metro. The projects comply with a coordination agreement between TransCanada and the distribution companies.

Canadian imports of shale production from Pennsylvania, Ohio and West Virginia averaged 2.1 Bcf/d in the first six months of 2015, according to the latest trade scorecard of the U.S. Department of Energy's gas regulation division.

The northbound U.S. exports currently leave about 1 Bcf/d in Ontario and Quebec gas consumption to Western Canadian supplies traveling on TransCanada's national Mainline, eastbound from Alberta. But U.S. supplies are forecast to take over almost all of the Eastern Canadian market for 3.1-3.2 Bcf/d. Thermal power plants are the only gas demand growth sector in the region, with consumption projected to rise gradually from the current 300 MMcf/d to 700 MMcf/d by 2030.

Northbound flows of U.S. gas on the recently reversed, former Canadian export route via the Niagara Falls region would more than double to 1.1 Bcf/d from the current level of 400 MMcf/d, TransCanada told the NEB.

The Niagara conduit adds to U.S. gas export traffic flowing into Union’s Dawn storage and trading hub farther west, on an older pipeline crossing beneath the St. Clair River from Michigan into Ontario.

Shale development in the U.S. Northeast has been a revolutionary event by launching a rising tide of production that costs less to deliver than former mainstay Alberta supplies traveling 3,000 kilometers (1,800 miles) or more, said TransCanada in its application.

"Such rapid change is unprecedented in the gas industry, where new sources of supply have tended to evolve and mature over decades. In a short period, shale production in North America has changed the dynamics of continental flow away from traditional pipeline transportation routes."

TransCanada, citing U.S. technical reviews, predicted production capacity in Appalachia would more than double to 34 Bcf/d by 2025 from the 2014 average of 14 Bcf/d. Ratings of Marcellus reserves have grown to 400 Tcf and Utica supplies are headed upwards into the 200-300 Tcf range, said the construction application.

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