TransCanadas New Contracts Lead to $570 Million NGTL System Expansion

In the aftermath of the Keystone XL decision, TransCanada announced its subsidiary, NOVA Gas Transmission (NGTL) has signed contracts for 2.7 Bcf/d of new firm natural gas transportation service that will require a $570 million system expansion for 2018.

Significant growth in unconventional natural gas supplies in northwestern Alberta and northeastern British Columbia are the primary driver for these new contracts, coupled with continued growth in market demand, the company said.

“Keystone has attracted a lot of headlines over the last five years: the last couple of weeks, a couple of thousand news stories. Despite that there are a lot of other things going on with the company,” Russ Girling, TransCanada’s president and CEO, told Reuters on Tuesday.

Girling described the expansion of the NGTL System as an important part of TransCanada’s industry leading $48 billion capital growth plan, which includes $23 billion of new natural gas pipelines.

“Our NGTL System is sitting on top of extensive natural gas supplies, making it well-positioned to unlock the resource and reliably and efficiently link it to growing markets,” Girling said. “The system has been operating at capacity, and more capacity is needed in these key areas that support the growth of the prolific gas resource in the Western Sedimentary Basin.”

The 2018 expansion program will increase the overall investment on the NGTL beyond the already announced $7.5 billion of projects. About $2.8 billion worth of these projects have received regulatory approval, with $800 million under construction, and an additional $1.7 billion of facilities are under regulatory review, according to the company.

The new expansion includes multiple projects that total 55 miles of 20- to 48-inch pipeline, one new compressor, about 35 new and expanded meter stations and other associated facilities.

Applications to construct and operate the various components of the 2018 expansion program will be filed with the National Energy Board (NEB) between the second and fourth quarter of 2016. Subject to regulatory approvals, construction is expected to start in 2017, with all facilities expected to be in service in 2018.

The company also plans to extend its existing 545,000 bpd Keystone pipeline to U.S. Gulf Coast refineries in the Houston, Texas City and Lake Charles areas.

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