2018 Canadian Gas Pipeline Report: Regulatory Uncertainty Hampers Buildout

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Market Access Continues to Drive Demand for Pipeline Expansion

Canada’s oil and gas pipeline industry has faced some turmoil over the past year. Third-party opposition, regulatory challenges and in-fighting between provincial governments has created a measure of uncertainty in the formerly robust sector.

Back in October last year, TransCanada canceled its Energy East and Eastern Mainline projects amid opposition and sustained regulatory obstacles. More recently, Kinder Morgan’s Trans Mountain Expansion project became embroiled in a legal battle with British Columbia’s provincial government. Alberta’s government threatened to throttle oil flow to its western neighbor. In May, the Canadian federal government decided to step in and purchase the Trans Mountain Pipeline and the proposed expansion for $2.4 billion.

Despite these challenges, demand is still high for natural gas capacity throughout Canada. 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: Announced in June 2012, Coastal GasLink Pipeline Ltd. proposes to build an approximately 670-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 would involve construction of a 48-in. diameter pipeline, in addition to the construction and operation of up to three meter stations and one compressor station. The initial capacity would be between 2 billion cubic feet per day (Bcf/d) and 3 Bcf/d. In June, TransCanada conditionally selected contractors for the project, which included conditionally awarding $620 million in contracting opportunities to First Nations groups in B.C. However, the project still awaits a final investment decision from its partner, LNG Canada, before construction can begin.

Fenelon Falls Pipeline Project

Location: Ontario
Stakeholder(s): Enbridge Gas Distribution Inc.
Overview: Enbridge Gas Distribution proposed to construct a natural gas pipeline to serve the communities of Fenelon Falls and Bobcaygeon, Ontario, in November 2015. The project comprises approximately 37 km of natural gas pipelines at different nominal pipe sizes and pressure systems, in the City of Kawartha Lakes, and the Township of Brock in the Regional Municipality of Durham, Ontario, to serve the community of Fenelon Falls. The proposed pipelines will be located within existing road allowances in the Study Areas and is expected to operate at a pressure up to 400 psi in some sections along the pipeline route and less than 20 percent of the specified minimum yield strength (SMYS). Segment 1, known as the Sunderland Reinforcement Segment, will consist of approximately 8 km of 6-in. steel extra high pressure (XHP) pipeline, from Sunderland to Manilla, Ontario, where it ties into an existing Enbridge pipeline. Segment 2, known as the Distribution Pipeline to Fenelon Falls Segment (DPFF), will originate in Oakwood and travel north to the Fenelon Falls, for a total of approximately 29 km of a 6- and 4-in. XHP steel and 6-in. high pressure polyethylene natural gas pipeline. Enbridge applied to the Ontario Energy Board (OEB) for approval in July 2017. Construction crews broke ground in May, after Enbridge received $12.3 million from the province to bring the expansion to Fenelon Falls, but the expansion to Bobcaygeon remains uncertain. Construction on the Fenelon Falls portion of the project is expected to be complete
in November.

NEXUS Gas Transmission Project

Location: Ontario
Stakeholder(s): Enbridge Gas Distribution Inc.
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. Construction is under way in Ohio. The pipeline is expected to be in service by the third quarter 2018.

NGTL System Expansion Project (2021)

Location: Alberta
Stakeholder(s): NGTL, TransCanada
Overview: In February, TransCanada announced plans to further expand its NGTL pipeline system. The company completed a large expansion of the same system in 2017. Now, TransCanada is exploring options to add approximately 350 km of new 48-in. pipe to the NGTL system in northwestern Alberta to help producers in the Western Canadian Sedimentary Basin (WCSB) get natural gas to market. These various pipeline sections within the study area would be located starting in Grande Prairie County, extending through the Municipal District of Greenview No. 16, Yellowhead County and ending in Clearwater County. Multiple pipeline sections would run parallel to the existing system and connect at each end to adjacent existing pipelines. The routes the company is investigating would be in three key areas: Grande Prairie West Area, Grande Prairie South Area and Edson South Area. TransCanada expects regulatory approval to come in the second quarter 2020, with an estimated in-service date a year later.

RELATED: 2018 Canadian Oil Pipeline Report

North Montney Mainline Project

Location: British Columbia
Stakeholder(s): NGTL, TransCanada
Overview: Located in Peace River Regional District of northeast British Columbia, the $1.4 billion North Montney Mainline (NMML) project includes a 301-km, 42-in. diameter pipeline and will also include metering facilities, valve sites and compression facilities. The project is backed by 20-year commercial contracts with 11 shippers to transport approximately 1.5 Bcf/d of natural gas. In May, the NEB recommended the approval of variance applied for in March 2017. With construction beginning this year, the estiamted in-service date is April 2019.

West Path Delivery Project

Location: Alberta
Stakeholder(s): NGTL, TransCanada PipeLines Ltd.
Overview: NGLT is proposing to build, own and operate a 21.5 km, 42-in. pipeline, two compressor stations and related facilities to supply southwestern Alberta and connected downstream markets with natural gas produced in Western Canada. The proposed route of the Western Alberta System Mainline Loop (Rocky View section) runs parallel to an existing pipeline utility corridor for 6 km through Cochrane, Alberta, and continues south through Rocky View County for another 15 km, where it would also parallel existing infrastructure where possible to minimize environmental impact. The company filed an application with the NEB in February and anticipates construction starting in June 2019. The estimated completion and in-service date is June 2020.

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 16 and published each issue.

North American Oil & Pipelines will provide a report on U.S. gas pipeline projects in the November/December 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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