TransCanada Corp., Canada’s largest natural gas and oil pipeline operator, on Tuesday credited an aggressive growth strategy to build new infrastructure for driving strong returns in 4Q2011.
Net income for the Calgary-based operator climbed to C$422 million (C53 cents/share) from C$316 million (C39 cents) in 4Q2010. Excluding one-time items, the company earned C$366 million (C52 cents/share) and generated operating income of C$880 million in the final three months of 2011. Quarterly revenue was up 15% year/year to C$2.36 billion.
“TransCanada experienced a strong 2011 driven by incremental earnings from C$10 billion of new assets placed into service since mid-2010, and the company’s existing diverse and high-quality energy infrastructure portfolio,” said CEO Russ Girling. “Having made substantial progress on our unprecedented capital program, these new operating assets are doing what they were designed to do — producing sustainable earnings and cash flow for our shareholders while delivering energy safely and reliably to customers across North America.”
Close to C$12 billion in new oil and gas pipeline projects are slated to begin service between now and early 2015. Among the projects expected to begin service is the proposed Keystone XL oil pipeline, which would carry supplies from Alberta’s oilsands along a 1,700-mile-route to the U.S. Gulf Coast. TransCanada plans to re-apply for a cross-border permit from the U.S. State Department after the initial application was rejected last month (see Daily GPI, Jan. 19). The projected in-service date was revised to early 2015; TransCanada originally expected the project to begin service in late 2014. The pipeline system has secured firm, long-term contracts for more than 1.1 million b/d for an average term of about 18 years.
Several big gas pipeline expansions for North America also are under way, many tied to abundant unconventional gas supplies. Last year the NEB approved gas pipeline projects with total capital costs of about C$910 million. Another C$810 million of gas projects await federal approval, the operator noted.
Between now and early 2015 the operator plans to build new connections for the Alberta System to carry gas primarily from the Horn River Basin/Montney Shale and Deep Basin of Alberta. Applications have been filed with the National Energy Board (NEB) to expand the Alberta System to accommodate requests for additional gas transmission service throughout the northwestern and northeastern portions of the Western Canadian Sedimentary Basin (WCSB). Incremental, firm commitments are in place to transport by 2014 an estimated 3.4 Bcf/d from western Alberta and northeastern British Columbia. Requests for additional volumes on the system from the northwestern portion of the WCSB also have been received.
“In addition, infrastructure to connect WCSB supply to markets continues to be pursued, particularly to support further development of Alberta oilsands production and to supply proposed liquefied natural gas export facilities on the West Coast” of British Columbia (BC), it said. At least seven LNG export proposals are being considered for BC (see Daily GPI, Feb. 10a; Feb. 10b).
Alaska gas remains a priority, said the operator. Last month the TransCanada Alaska Co. LLC Alaska Pipeline Project filed 11 draft environmental reports with the Federal Energy Regulatory Commission (FERC) for a proposed 803-mile U.S. corridor from the Point Thomson field on Alaska’s North Slope to Prudhoe Bay to the Canadian border (see Daily GPI, Jan. 18). The resource reports are to serve as the foundation for an environmental impact statement for the Alaska portion of the pipeline. TransCanada and ExxonMobil Corp. have been working on the Alaska pipeline project since 2009.
TransCanada’s Alaska Pipeline Project team “continues to work with shippers to resolve conditional bids received as part of the project’s open season,” and is working toward a FERC application deadline of October for the “Alberta option, which would carry gas from Alaska to the Alberta System and on to other continental markets.”
In addition, the pipeline operator revealed that it “has started discussions with Alaska North Slope producers on the LNG options that would require a pipeline from Prudhoe Bay to LNG facilities, to be built by third parties, located in south-central Alaska.” Alaska Gov. Sean Parnell last year said stakeholders needed to consider an LNG option for the state’s gas supplies rather than building a gasline to the Lower 48 states (see Daily GPI, Jan. 20; Oct. 31, 2011).
An application also has been filed with the NEB to change the business structure, as well as the terms and conditions, of service for the Canadian Mainline, including tolls through 2013. The NEB in January said tolls would remain the same on the gasline until a prolonged rate case is completed (see Daily GPI, Jan. 9). Despite protests by Canadian and U.S. gas buyers the NEB allowed the Mainline to begin this year with transportation costs fixed at 2011 levels as an interim measure. An oral hearing is set to begin June 4 but a decision isn’t expected until late this year or in early 2013, TransCanada said.
The operator last November also refiled an application to construct C$130 million of new infrastructure for the Mainline to receive Marcellus Shale gas at the Niagara Falls receipt point (see Daily GPI, Nov. 14, 2011).
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