Daily GPI / Infrastructure / NGI All News Access

TransCanada Mainline Conversion Price Tag Grows

Forecast costs have jumped by C$3.7 billion (US$2.7 billion), or 30%, to C$15.7 billion (US$11.3 billion) for the proposed Energy East partial conversion of TransCanada Corp.'s natural gas Mainline to oil service from Alberta to the Atlantic Coast.

But amendments to the year-old and hotly contested construction application, filed with the National Energy Board (NEB), say Canadian producers continue support the plan as a new eastern and world market outlet for 1.1 million b/d, chiefly from the northern Alberta oilsands.

Oil shippers have signed binding transportation contracts, averaging 19 years long, for 995,000 b/d, TransCanada said. Toll commitments add up to about C$42 billion (US$30 billion). Use of the remaining available delivery capacity is under discussion with industry interests.

The package makes more than 700 route changes in response to public demand and environmental recommendations along the right-of-way. TransCanada President Russ Girling said, "This amended filing has been shaped by direct, on-the-ground input from Canadians across the country."

The amendments also double, to C$1.5 billion (US$1 billion), the original cost estimate for transferring the half-century-old legs of the gas Mainline that will be converted over to the wholly owned subsidiary that has been created to run the project, Energy East.

The increase, called the "acquisition premium," is an estimated cost of C$734 million (US$528.5 million) for carrying out a fall agreement with gas distributors Union, Enbridge and Gaz Metro in Quebec.

The deal settled a furious dispute over volumes of Mainline gas capacity that Energy East will remove and who should pay for replacing it. In western Canada, the oil conversion uses vacant delivery space. But the project's Ontario and Quebec legs affect capacity in heavy use for growing low-cost imports of shale gas from the Marcellus and Utica deposits in the Appalachian region of the United States.

Amendments are also in the works for a gas project that TransCanada calls the Eastern Mainline, which is dedicated to Ontario and Quebec markets and potentially to traders that continue to maintain exports of western Canadian production to the northeastern U.S.

ISSN © 2577-9877 | ISSN © 1532-1231

Recent Articles by Gordon Jaremko

Comments powered by Disqus