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TransCanada plays big in LNG signs for C$1.9B link to Kitimat
TransCanada has notched another success in its drive to become the lead transportation company in moving natural gas from northeastern British Columbia gas fields to LNG export terminals on the Pacific Coast.
Operating through its Nova Gas Transmission subsidiary, TransCanada said it has struck a deal with operator Chevron and Apache to feed the proposed Kitimat LNG facility at the deepwater port near Kitimat and give that project a fresh lift to place itself among the frontrunners to export LNG from British Columbia.
The C$1.9 billion Merrick Mainline project is designed to cover 160 miles from Dawson Creek in the province’s resource-rich northeast to Summit Lake, where it would feed into the Kitimat partners Pacific Trail Pipeline to the liquefaction plant.
The Canadian subsidiaries of Chevron and Apache say they have signed an agreement for TransCanada to deliver about 1.9 billion cubic feet per day to the Merrick line, aiming for an in-service date in the first quarter of 2020.
Although preliminary work is under way, construction will only go ahead if the National Energy Board gives a green light and if Chevron and Apache make a final investment decision to proceed with Kitimat LNG.
Four projects under development TransCanada Chief Executive Officer Russ Girling said his company now has four major natural gas pipeline projects under development in the region at a combined cost of C$12.6 billion and “we are committed to ensuring they are all built responsibly and with minimal environmental impact.”
He said a regulatory application should be filed in the fourth quarter of 2014.
TransCanada said the Merrick system would be a “significant new link” in British Columbia’s emerging plans to export LNG, extending the company’s existing Groundbirch Mainline system.
The other commitments TransCanada has negotiated to serve the LNG sector are led by the proposed Prince Rupert Gas Transmission Project and the Coastal GasLink project.
In January 2013, Progress Energy Canada awarded TransCanada the rights to build, own and operate the Prince Rupert pipeline to deliver gas to the Petronas-operated Pacific NorthWest terminal near Prince Rupert.
That came only six months after TransCanada landed a similar deal with the Shell-operated LNG Canada partnership, which gives it identical rights to carry 4 billion cubic feet per day on the Coast GasLink system from the Montney region.
TransCanada is also involved in feeder lines out of the Horn River and North Montney basins.
All told, the company’s LNG role puts it ahead of rivals Spectra Energy and Enbridge, in what Girling describes as the “sweet spot of our backyard in terms of an opportunity to grow earnings beyond the 2015 timeframe.”
Site work at Kitimat As far as Kitimat LNG goes, a Chevron executive said early work is under way to prepare a terminal site and prepare for construction of the Pacific Trail pipeline.
So far, the partnership is strongly placed, having received a permit from the National Energy Board to export 11 million metric tonnes a year of LNG.
It has also struck benefits agreements with 15 of 16 First Nations along the pipeline right of way from Summit Lake to Kitimat, giving it the most successful record in getting aboriginal communities on its side.
The spokesman said Kitimat LNG is optimistic it can sign up contract buyers for 65 percent to 70 percent of the production, but is not setting deadlines for a final investment decision.
- Gary Park
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