TransCanada PipeLines said last week the loss of two shipperagreements enabled it to slash the price of its 1999 expansionproject by more than half, but it still anticipates being able toprovide 76% of the capacity (208 MMcf/d) of the original project byNovember 1999. The Canadian pipeline monopoly filed its originalproject application with the National Energy Board in April.

The new project will cost only C$404.5 million, down by C$575.9million from the April plan, and will add 108 MMcf/d of newcapacity by November 1999 through construction of 97 miles of newpipeline looping and four additional compressor units. The projectwill serve customers in eastern Canada, and the U.S. Midwest andNortheast. The remaining 100 MMcf/d will be provided throughtransportation service already available in the marketplace,including capacity turned back by others, TransCanada said.

TransCanada said Kamine Development offered to relinquish 44MMcf/d of its capacity on the system following the Niagara MohawkPower Corp. settlement, which resulted in the termination oflong-term power sales agreements with NiMo and the shutdown ofthree Kamine cogeneration facilities. In addition, Union Gasdecided not to take its 38 MMcf/d portion of the proposed newcapacity when it found enough excess in the secondary market tomeet a portion of its incremental transportation needs. “We intendto continue to survey the needs of our customers to be marketresponsive and ensure that any facilities we build are necessaryand in the public interest,” said TransCanada Energy TransmissionPresident Bob Reid.

“We continue to seek ways to keep down costs and take innovativeapproaches to meet the needs of our customers. This approach is inkeeping with our objective to be the low-cost transporter ofnatural gas to multiple markets in North America.”

The changes filed with the NEB lowered capital costs by 59%.Should this application be approved and the facilities constructedby November 1999, TransCanada will have expanded its deliverycapability by about 1.1 Bcf/d since November 1996. Combined withthe 700 MMcf/d expansion into Chicago by Northern Border pipeline,30% owned by TransCanada, these expansions will have increaseddelivery capability from the Western Canadian Sedimentary Basin(WCSB) by 1.8 Bcf/d between 1996 and 1999.

“The outlook for continued low-cost expansion on our pipelinesystem remains positive, particularly in light of the recent accordwith western Canadian producers that supports the regulatorychanges necessary to encourage continued pipeline expansion fromwestern Canada,” said Reid.

Rocco Canonica

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