TransCanada Corp. was picked by Progress Energy Canada Ltd. to build a $5 billion pipeline that would deliver gas to its proposed liquefied natural gas (LNG) export project on the west coast of British Columbia (BC).

The company is to design, build, own and operate the Prince Rupert Gas Transmission project, which would carry gas from North Montney near Fort St. John, British Columbia (BC), to the planned Pacific Northwest LNG export terminal in Port Edward near Prince Rupert, BC. The agreement between the companies requires board approvals and is expected to be finalized early this year.

“The proposed Prince Rupert Gas Transmission project will allow British Columbians, and all Canadians, to continue to benefit from the responsible development of the growing supply of valuable natural gas resources in the WCSB [Western Canada Sedimentary Basin]”, said TransCanada CEO Russ Girling. “Together with our previously announced Coastal GasLink Pipeline project, this is the second major natural gas pipeline proposed to Canada’s West Coast for TransCanada, demonstrating the confidence that LNG sponsors continue to place in our ability to design, build and safely operate pipeline systems.”

The project would be about 750 kilometers (470 miles) of large-diameter pipe with initial capacity of 2 Bcf/d, expandable to 3.6 Bcf/d. The project could be in service by the end of 2018 assuming board and regulatory approvals.

TransCanada has also proposed extending its existing NOVA Gas Transmission Ltd. (NGTL) system in northeast BC to connect with Prince Rupert Gas Transmission and with additional North Montney gas supply from Progress and other parties. The new infrastructure would allow Pacific Northwest LNG to access both North Montney gas as well as other WCSB supply through the NOVA Inventory Transfer (NIT) trading hub and the existing NGTL pipeline network, the company said. Cost estimates for extensions of the NGTL system are $1-1.5 billion, with an in-service date targeted for the end of 2015.

TransCanada owns and operates about 24,000 kilometers (15,000 miles) of natural gas pipelines in Western Canada, including the Foothills Pipeline System in southeast BC, and 360 kilometers (225 miles) in service or pending approvals in northeast BC. If approved, the Prince Rupert Gas Transmission project and TransCanada’s proposed Coastal GasLink Pipeline project to Kitimat would together add more than 1,400 kilometers (870 miles) to the company’s Western Canadian gas transmission systems.

TransCanada was selected by Shell Canada Ltd. last summer to build the 1.7 Bcf/d Coastal GasLink project, which would transport Montney and Horn River Basin gas to BC to supply Shell’s planned 12 million ton/year LNG export facility near Kitimat (see Daily GPI, June 6, 2012).

Earlier this month, Spectra Energy Transmission made a construction application to Canada’s National Energy Board for northeastern BC pipeline and processing facilities that would cater to supply development by Progress Energy Resources Corp. (see Daily GPI, Jan. 7). The application arrived two weeks after the Canadian government approved the C$6 billion takeover of Progress by Petronas, Malaysia’s state-owned oil, gas, LNG and tanker shipping conglomerate (see Daily GPI, Dec. 11, 2012).

Early last month Petronas Carigali Canada Ltd. and Progress provided more details on the LNG export project, including its name. This was before the merger approval, and the two said at the time that if the merger were allowed by regulators, the LNG project could be up-sized (see Daily GPI, Dec. 5, 2012).

More than a half-dozen projects to export LNG from Canada’s western coast have been proposed, and it’s obvious to all that not all of them will go forward. Last year, as LNG buyers in Asian markets expressed growing dissatisfaction with LNG prices linked to those for oil, a shadow was cast on the projects’ economics (see Daily GPI, Oct. 31, 2012; Oct. 11, 2012). The latest partners to ponder exporting LNG from BC are ExxonMobil Corp. and Imperial Oil Ltd. (see Daily GPI, Dec. 12, 2012).

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