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TC Pipeline Expansions to Increase Western Canada Natural Gas Exports to U.S.
Capacity additions underway in annual stages on three TC Energy Corp. pipeline subsidiaries are set to increase Canadian natural gas exports to California, Nevada, Oregon and Washington during 2022 and 2023.
The coordinated expansions, a package titled West Path, pioneer a switch to quiet growth that TC President Francois Poirier outlined at a spring investment forum held by the Scotiabank CAPP Energy Symposium that was cosponsored by the Canadian Association of Petroleum Producers.
Poirier said the Calgary pipeline and power conglomerate plans to avoid repeating environmental and political “regulatory risk” that aborted high-profile proposals for new conduits, Energy East across Canada and Keystone XL in the United States.
He described the quiet approach as “in-corridor” and “bolt-on” pipeline additions where public, regulatory and political stakeholders are familiar with gas deliveries.
The stealth growth strategy drops big projects that whip up fossil fuel furor by breaking new ground. Focus switches to decades-old TC pipeline corridors, where markets and regulators accept gradual delivery increases as natural.
West Path, forecast to cost C$1.2 billion ($960 million) in Canada and $335 million in the United States, would increase gas exports by about 260 MMcf/d or 10% through a delivery network dating back to 1961.
The package includes additions advancing through regulatory and construction stages by TC subsidiaries Foothills Pipe Lines (South BC) Ltd., Nova Gas Transmission Ltd. (NGTL), and Gas Transmission Northwest Pipeline (GTN).
The Canada Energy Regulator (CER) has approved a C$133 million ($106 million), 100 MMcf/d Foothills expansion scheduled for 2022 completion. Approval is sought to add another 160 MMcf/d for C$402 million ($322 million) in 2023.
Matching capacity additions are underway on NGTL as the TC supply collection grid spanning Alberta and British Columbia, and by GTN as the connected U.S. pipeline serving the Pacific Northwest and California.
West Path capacity expansions do not rely on total gas use to rise in a U.S. region where civic and state policies steer energy demand growth toward renewable power. Instead, Canadian supply is rated as a potent competitor on established gas markets.
“The Western Canada Sedimentary Basin (WCSB) will continue to be a cost competitive source of natural gas for consumers in these markets,” predicted a CER filing by Foothills.
An open season to gauge interest in 30-year-plus West Path delivery contracts supported the prediction. “There was no interest in existing customers relinquishing sufficient capacity to eliminate the need for the project,” said Foothills.
“This level of interest reflects strong interest in contracting to the downstream markets served by Foothills, as well as emphasizes there is confidence that the WCSB is an important supply source and the economics of sourcing transportation from the region are favorable.”
Gas trade records compiled by the CER also support the optimism. Canadian exports to the western states grew by 18% to 1.13 Bcf/d in 2020 from 960 MMcf/d in 2010, while sales shrank in the U.S. Midwest and Northeast.
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