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TransCanada Scales Back Expansion Plans

July 27, 1998
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TransCanada Scales Back Expansion Plans

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

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

TransCanada said Kamine Development offered to relinquish 44 MMcf/d of its capacity on the system following the Niagara Mohawk Power Corp. settlement, which resulted in the termination of long-term power sales agreements with NiMo and the shutdown of three Kamine cogeneration facilities. In addition, Union Gas decided not to take its 38 MMcf/d portion of the proposed new capacity when it found enough excess in the secondary market to meet a portion of its incremental transportation needs. "We intend to continue to survey the needs of our customers to be market responsive and ensure that any facilities we build are necessary and in the public interest," said TransCanada Energy Transmission President Bob Reid.

"We continue to seek ways to keep down costs and take innovative approaches to meet the needs of our customers. This approach is in keeping with our objective to be the low-cost transporter of natural 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 constructed by November 1999, TransCanada will have expanded its delivery capability by about 1.1 Bcf/d since November 1996. Combined with the 700 MMcf/d expansion into Chicago by Northern Border pipeline, 30% owned by TransCanada, these expansions will have increased delivery 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 pipeline system remains positive, particularly in light of the recent accord with western Canadian producers that supports the regulatory changes necessary to encourage continued pipeline expansion from western Canada," said Reid.

Rocco Canonica

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