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2014 Canadian Natural Gas Pipelines Report

1

Canada Looks to Export Gas to Asia, EuropeCanada Looks to Export Gas to Asia, Europe

Pipeline Projects Head to the Coasts to Seek New Markets

By Bradley Kramer

While Canada’s crude oil supply gets the most press, the country is no slouch when it comes to natural gas production. Canada ranks fifth in the world in natural gas production with approximately 14 billion cubic feet per day (Bcf/d).

Historically, Canada has primarily marketed its oil and gas within
North America, with the United States as its biggest customer. However, with the U.S. oil and gas production on the rise, Canada is looking to export its products to other areas of high demand.

Asian countries have been a prime target for Canadian fossil fuels, but the Canadian Chamber of Commerce recently opined about opportunities in Europe as well. In a June 27 op-ed, Chamber president and CEO Perrin Beatty argued that the conflict between Russia and Ukraine has led to increased interest in Canada’s energy supply. Russia is currently responsible to about one-third of European oil and gas imports. Beatty says that Canada must strengthen relations with the European Union if it wants to receive full value for its energy resources. He noted recent efforts to improve liquid natural gas (LNG) export infrastructure.

“The past year has seen a number of small but important steps forward on the EU/Canada energy partnership,” Beatty wrote. “Last June, a proposed LNG facility on Canada’s East Coast signed a long-term contract with E.ON. Just last week, Europe’s first major shipment of Canadian oil sands crude arrived on the coast of Spain. The proposed softening of European Fuel Quality directive will help give Canadian crude oil a more equal playing field in European markets.”

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Environmental and political factors are a major driver for increased trade between Canada and the EU.

“Canada can become another Norway for the EU, a reliable energy partner with strong environmental regulations and deep respect for human rights,” Beatty continued. “But achieving this vision will take time, money and effort.”
Judging from the current gas-related pipeline activity, Beatty’s argument seems to be bearing fruit as most projects seem to be focused on Canada’s coasts for export. What follows is an overview of many of the natural gas pipeline projects currently under way or in the permitting process.

Coastal GasLink Pipeline Project
Location: British Columbia
Stakeholder(s): TransCanada Corp., Shell Canada Ltd., LNG Canada
Overview: Coastal GasLink Pipeline Ltd. proposes to build an approximately 650-km pipeline from the Dawson Creek area to the British Columbia coastline. The pipeline will transport natural gas to the proposed LNG Canada facility near Kitimat. The project, which was announced in June 2012, would involve construction with 48-in. diameter pipe, in addition to the construction and operation of up to three meter stations and one compressor station. The initial capacity would be approximately 1.7 billion cubic feet per day (Bcf/d). An application for environmental certification was filed in January and is currently under review by the BC Environmental Assessment Office. Construction, pending all required regulatory and project approvals, is expected to begin in 2015.

Eastern Mainline Pipeline Project
Location: Ontario
Stakeholder(s): TransCanada
Overview: On May 8, TransCanada PipeLines Ltd. submitted a project description to the Canadian National Energy Board (NEB) to build up to 370 km of new 36-in. natural gas pipeline between Markham and Iroquois, Ontario. For much of the route, the new pipeline will follow the existing TransCanada Mainline. The company is currently engaged in environmental and engineering field work and anticipates submitting an application for public hearing by the third quarter this year. Pending approval, construction is scheduled to begin in 2016.

King’s North Connection Project
Location: Ontario
Stakeholder(s): TransCanada
Overview: TransCanada is proposing to construct, own and operate a new natural gas transmission pipeline in the communities of Vaughan, Brampton and Toronto, Ontario, in order to reliably serve consumers in Ontario and Eastern Canada. The King’s North Connection project will connect proposed new Enbridge Gas Distribution pipeline facilities with TransCanada’s existing natural gas transmission facilities. This collaborative approach will reduce the number of new natural gas pipelines required in the Greater Toronto Area. Once Aboriginal, landowner and stakeholder engagement has been conducted and environmental and engineering studies have been completed, TransCanada anticipates filing an application with the NEB by the third quarter this year. Pending approval, construction is planned to begin in the second quarter 2015, with an in-service date in the fourth quarter 2015.

Mackenzie Gas Project
Location: Northwest Territories
Stakeholder(s): TransCanada, Imperial Oil Resources, ConocoPhillips Canada, Shell Canada Ltd., ExxonMobil Canada and the Aboriginal Pipeline Group (APG).
Overview: The Mackenzie Gas Project (MGP) is a proposed 1,196-km natural gas pipeline and gas gathering system, liquids extraction, liquids pipeline and related field developments along the Mackenzie River valley of Canada’s Northwest Territories. The NEB approved the project in March 2011, but included a requirement that construction must commence by December 2015. The project proponents continue to monitor ways to move the project forward, but so far natural gas market conditions do not signal a commercially viable opportunity. The stakeholders have reduced spending on the project to a minimum, but are seeking a solution to allow project activities to be restarted in the future. If development of the project ultimately goes ahead, it would result in a pipeline being constructed from Inuvik, Norwest Territories, to the northern border of Alberta, where it would connect to TransCanada’s system.

Merrick Mainline Pipeline Project
Location: British Columbia
Stakeholder(s): NOVA Gas Transmission Ltd. (NGTL), a subsidiary of TransCanada
Overview: In response to the rapidly increasing development of natural gas production from northeastern British Columbia, NGTL is proposing to construct, own and operate an extension to its existing Groundbirch Mainline. Located in the Peace River and Caribou regional districts, the proposed Merrick Mainline will be 260-km of up to 48-in. diameter pipeline and include associated metering facilities and valve sites. The north end will connect approximately 1 km from the west end of the Groundbirch Mainline, located about 35 km west of Dawson Creek. The south end will connect near Summit Lake, about 42 km north of Prince George, British Columbia. NGTL filed a project description with NEB in June and anticipates filing an application for approval in the fourth quarter this year. Pending approval, temporary infrastructure construction is planned to begin in the first quarter 2016, with pipeline to follow in the third quarter 2017 and an in-service date expected in the first quarter 2020.

NEXUS Gas Transmission Project
Location: Ontario
Stakeholder(s): Enbridge, Spectra Energy and DTE Energy
Overview: The proposed NEXUS Gas Transmission Project (NGT) is a joint venture among Enbridge, Spectra Energy and DTE Energy and is being developed to support the growing demand for natural gas in the upper U.S. Midwest and eastern Canadian regions. With a decline in western Canadian natural gas supplies to these regions, the proposed NGT system is designed to transport at least 1 Bcf/d of growing supplies of Ohio Utica shale gas to the high-demand markets in Ohio, Michigan and Ontario, Canada. The proposed path for NGT will consist of a newly constructed, greenfield pipeline that will extend approximately 250 miles from receipt points in eastern Ohio to interconnects with the existing pipeline grid in southeastern Michigan. As proposed, the path will utilize both existing and expansion capacity on the interstate pipeline system owned by Vector Pipeline LP to access the Dawn Hub in Ontario and the Enbridge Tecumseh storage facility. The NGT system is targeted to be in service as early as November 2016, depending on final market demand, commitments and necessary regulatory approvals. The project must obtain regulatory authorizations from the U.S. Federal Energy Regulatory Commission (FERC) and the NEB, as well as other Canadian agencies.

North Montney Extension Project
Location: British Columbia
Stakeholder(s): NGTL
Overview: The proposed $1.5 billion North Montney Mainline will be a large-diameter extension from the existing Groundbirch Mainline section of the NGTL system in northeast British Columbia. The project will consist of two sections, Aitken Creek and Kahta, totaling approximately 305 km in length and will include associated metering facilities, valve sites and possible compression facilities. The project will also include an interconnection with TransCanada’s proposed Prince Rupert Gas Transmission (PRGT) project to provide natural gas supply to the proposed Pacific NorthWest LNG export facility near Prince Rupert, British Columbia. Pending necessary regulatory approval, pipeline construction is planned to begin by the third quarter 2015. NGTL expects the Aitken Creek section to be operational in the second quarter 2016, the Kahta section in the second quarter 2017 and the export delivery facilities in 2019.

Parkway ProjectLocation: Ontario
Stakeholder(s): TransCanada
Overview: TransCanada recently received NEB approval to construct the Eastern Mainline Expansion Project, which includes the 12.9 km Parkway Pipeline. The Parkway project will consist of a 42-in. diameter pipeline that parallels, in two separate sections, a portion of the existing TransCanada Mainline in the cities of Brampton and Vaughan, Ontario. The project will also include minor system modifications at various TransCanada facility sites throughout southern Ontario. The Parkway Pipeline will increase capacity on TransCanada’s natural gas transmission system providing the markets in the Greater Toronto Area (GTA) and Central Southern Ontario with additional natural gas supply. This increased capacity will provide for the commercial commitments of supplying Marcellus shale gas to these markets. The pipeline will be constructed along TransCanada’s existing right of way to reduce environmental effects and minimizing disruption to nearby residents and landowners.

In January, contractors completed horizontal directional drilling to cross the Credit River, with tie-in completed later in the spring. Cleanup and reclamation of the jobsite is ongoing to restore the land to its previous condition.

Prince Rupert Gas Transmission Project
Location: British Columbia
Stakeholder(s): Progress Energy Canada Ltd., TransCanada
Overview: In January 2013, TransCanada was selected by Progress Energy to design, build, own and operate an approximately 750-km natural gas pipeline in northern British Columbia. If approved, the Prince Rupert Gas Transmission (PRGT) project will deliver natural gas from a point near the District of Hudson’s Hope to the proposed Pacific Northwest LNG facility on Lelu Island, within the District of Port Edward. A conceptual corridor (an initial draft of the pipeline route) has been created for discussion and planning purposes. Input from Aboriginal groups and stakeholders, such as landowners, local communities and government, will help shape the final route. The final route will also reflect the terrain, environment, constructability and economics of the project. Environmental and engineering studies began in June, with an environmental assessment application expected to be submitted in early 2014. Construction is scheduled to begin in 2015, with the pipeline in service in 2018.

Spectra Energy/BG Group Natural Gas Transportation System
Location: British Columbia
Stakeholder(s): Spectra Energy, BG Group
Overview: The proposed project from northeastern British Columbia to Prince Rupert, British Columbia, would include approximately 850 km of pipeline with a capacity of up to 4.2 Bcf/d. The project will provide the required natural gas transportation capacity to meet the demands of a proposed LNG terminal on British Columbia’s coastline, in keeping with the provincial government’s Jobs Plan and its goal of establishing LNG facilities by 2020. The project also will connect with the Spectra Energy system at Station 2 (southwest of Fort St. John), a growing natural gas hub that collects supply from multiple areas of the province and other supply basins in Western Canada. The project is expected to be in service by 2019.

Towerbirch Expansion Project
Location: Alberta, British Columbia
Stakeholder(s): NGTL
Overview: NGTL is proposing to construct, own and operate an extension to the NGTL System, consisting of approximately 106 km of up to 36-in. diameter pipe that will start in the county of Saddle Hills, 80 km northwest of Grande Prairie, Alberta, and end 31 km southeast of Fort St John, British Columbia, in the Peace River Regional District. NGTL anticipates filing an application with the NEB in the first quarter 2015. Pending approval, construction is expected to begin in the third quarter 2016, with an in-service date in the first quarter 2017.

Wolverine River Lateral Loop Project
Location: Alberta
Stakeholder(s): NGTL
Overview: NGTL is proposing to construct, own and operate the Wolverine River Lateral Loop (Carmon Creek Section) Pipeline, formerly known as the Carmon Creek Pipeline. The project will entail the construction of approximately 61 km of 20 in. and will include associated valve sites. If approved, the project will extend from a tie-in point at the site of the proposed Otter Lake Compressor Station to the site of the proposed Carmon Creek East Sales meter station (an independent project for which NGTL will make a separate application to the NEB), located approximately 35 km northeast of Peace River, Alberta. The NEB announced in July that a public hearing date is pending. Pending approval, pipeline construction is expected to begin in the fourth quarter 2015, with an in-service date in the second quarter 2016.

This is not a comprehensive list of the pipeline projects for the upcoming construction season. For updates regarding ongoing projects, refer to the Project Roundup on page 14 and published each issue.

North American Oil & Pipelines will provide a report on U.S. gas pipeline projects in the November issue. The Canadian and U.S. oil pipeline reports were published in the February and May issues, respectively.

Bradley Kramer is managing editor of North American Oil & Gas Pipelines. Contact him at bkramer@
benjaminmedia.com.

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