TransCanada plans to spend C$570 million ($427.6 million) on an expansion of its Nova Gas Transmission Ltd. system in order to meet increased demand, the company said Monday.
The pipeline company said the expansion of the system, which is expected to be completed by 2018, is needed to accommodate the about 2.7 Bcf/day of new firm gas transportation service contracts NGTL recently signed.
"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," TransCanada CEO Russ Girling said Monday.
"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," he added.
TransCanada noted significant growth in unconventional gas supplies in northwestern Alberta and northeastern British Columbia as well as the continued growth in market demand as the primary drivers for NGTL's new supply contracts.
The proposed expansion will include the construction of multiple projects that total 88 kilometers (55 miles) of 20- to 48-inch-diameter pipelines, a new compressor and about 35 new and expanded meter stations and other associated facilities.
TransCanada said it expects to file applications with the National Energy Board to construct and operate the various components of the 2018 expansion between the second quarter and fourth quarters of 2016.
The company expects, subject to regulatory approvals, that it will start construction in 2017 and expects all facilities to be in service in by the end of 2018.
Because the proposed NGTL expansion program represents the minimum system additions required to meet current contracts, TransCanada said it still might call for additional expansions following a full assessment of its aggregate system requirements, which it expects to complete by the end of 2015.
The expansion announcement from TransCanada is in line with both recent production trends on its TransCanada Alberta system as well as plans from other pipeline players in the region, according to Platts Analytics.
TransCanada Alberta production receipts, after declining from 11.4 Bcf/d in 2006 to 9.4 Bcf/d, began steadily increasing and are averaging 10.5 Bcf/d, year-to-date, in 2015.
Westcoast Energy has announced it will send an additional 240 MMcf/d of production volumes onto TransCanada's system via its Sunset (Groundbirch) interconnect beginning in the fourth quarter of 2016.
Westcoast says it has firm contracts in place as a result of a May 2015 open season, and will build an additional compressor station to accommodate these increased volumes on TransCanada Alberta's system. This will represent a 51% increase in throughput at Sunset, compared with average 2015 flows of 467 MMcf/d from Westcoast onto TransCanada Alberta at this point.
"Capturing these incremental volumes and constructing the new facilities will ensure NGTL can continue to efficiently and competitively meet the future natural gas transportation needs of our customers," Girling said.
"The expansion of the NGTL System is an important part of TransCanada's industry-leading C$48 billion capital growth plan that includes C$23 billion of new natural gas pipelines," he added.
