Bloomberg News

TransCanada to Build $4 Billion Pipe to Export Canadian Gas

June 05, 2012

TransCanada Corp. (TRP) has been selected by Royal Dutch Shell Plc (RDSA) and partners to build a $4 billion pipeline to Canada’s West Coast for exporting natural gas.

The pipeline, with an initial capacity of at least 1.7 billion cubic feet a day, will run from the Montney and Horn River gas-producing regions to a proposed liquefied-natural-gas export facility near Kitimat, British Columbia, TransCanada said in a statement today.

Operations would begin “toward the end of the decade” subject to regulatory and corporate approvals, Calgary-based TransCanada said. Shell and its other partners in the proposed project, Korea Gas Corp. (036460), Mitsubishi Corp. (8058) and PetroChina Co. (857), have said the terminal will initially be able to ship about 2 billion cubic feet a day. Shell has a 40 percent stake and the other partners have 20 percent each.

The Shell project is one of at least five developing proposals to export Canadian natural gas to Asian markets as prices in the U.S. slumped to the lowest point in a decade amid a ramp-up in drilling.

“Canada is not going to be restrained from developing their oil sands and natural-gas resources,” Jose Valera, a partner in the energy practice at the law firm Mayer Brown LLP. “It’s going to be more a question of people investing the capital resources to develop the projects. The market is going to start sorting all this out.”

Licenses Granted

Canadian regulators have granted licenses for two LNG export projects in the area of Kitimat. BC LNG Export Co- operative LLC, jointly owned by Haisla Nation and Houston-based LNG Partners LLC, was given a 20-year license, according to a statement on April 11. In October, the National Energy Board approved an LNG terminal planned by Encana Corp. (ECA:US), Apache Corp. (APA:US) and EOG Resources Inc. (EOG:US)

Shell’s project has not yet received a license. TransCanada and Shell are developing “definitive agreements” on the pipeline, to be known as Coastal GasLink, according to the statement. Connections also are planned to existing pipelines in British Columbia.

The Horn River and Montney formations in Alberta and British Columbia may hold the equivalent of more than 200 trillion cubic feet of natural gas, according to an April 2011 report by the U.S. Energy Information Administration.

TransCanada rose 0.8 percent to C$42.48 at the close in Toronto.

To contact the reporters on this story: Jim Polson in New York at jpolson@bloomberg.net; Bradley Olson in Houston at bradleyolson@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net


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