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Agreements Pave Way for TransCanada’s Eastern Projects

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TransCanada Corp. has resolved issues with local distribution companies regarding two major projects on Canada’s East Coast. The company reached an agreement with Gaz Metro LP (GMi), Enbridge Gas Distribution Inc. and Union Gas Ltd. regarding Energy East and the Eastern Mainline Project.

The Aug. 24 agreement ensures that Energy East and the Eastern Mainline Project will provide gas consumers in eastern Canada with sufficient natural gas transmission capacity and reduced natural gas transmission costs.

TransCanada officials listed to the concerns of the local distribution companies (LDCs) and worked with them to address their concerns, according to Russ Girling, TransCanada’s president and CEO. He said the agreement will benefit consumers by providing “safe, efficient and more affordable delivery of North American produced oil and natural gas” to meet energy demands.

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“It has always been our intent to ensure our customers in Québec and Ontario would receive the gas they needed and we have done that through this agreement,” Girling said. “We have also maintained that repurposing a portion of the Canadian Mainline for Energy East would make the system more efficient and reduce transportation costs to our customers. We are pleased to honor our commitments.”

Terms of the agreement include:

  • The LDCs’ issues related to both Energy East and the Eastern Mainline Project have been addressed.
  • TransCanada will size the Eastern Mainline Project to meet all firm requirements including gas transmission contracts resulting from both 2016 and 2017 new capacity open seasons plus approximately 50 million cubic feet per day (MMcf/d) of additional capacity.
  • TransCanada will also ensure a long-term benefit to gas consumers in eastern Ontario and Québec (Eastern Triangle) of at least $100 million through to 2050.

Energy East is a proposed 4,600-km oil pipeline that will have the capacity to transport 1.1 million barrels per day (bpd) of crude oil from Alberta and Saskatchewan directly to refineries and port terminals in eastern Canada. The project will generate thousands of good paying jobs and millions of dollars in annual tax revenues to fund health care, build roads and schools in local communities along the pipeline’s route.

The Conference Board of Canada has concluded the project will support 14,000 direct and indirect full-time jobs across Canada during development and construction and generate more than $7 billion in additional tax revenues in the first 20 years of operation for local, provincial and federal governments, along with $36 billion in GDP growth across the country.

“Rather than spending billions of dollars purchasing oil from countries like Nigeria, Saudi Arabia and Angola for much of the 600,000 barrels we import every day, that money could be spent here at home, helping to create jobs, generate new opportunities and stimulate economic growth for Canada,” Girling argued.

A Fraser Institute Report released last week highlighted, in part, that pipelines are safer than rail when transporting crude oil to market. The new study concluded that while both modes of transportation are safe, transporting oil through pipelines is four-and-a-half times safer than oil by rail. Pipelines remain the safest, most efficient and least GHG-intensive way of transporting large volumes of crude oil to market.

TransCanada proposes to convert 3,000 km of one of its Canadian Mainline pipelines that is currently not fully contracted on a firm basis from natural gas to oil service for Energy East.

This conversion will lower the comparative cost of transmission service for local natural gas companies, power producers and industrial clients we serve, primarily through the reduced owning and operating costs of a smaller Canadian Mainline system. Last month TransCanada announced it had safely delivered the one billionth barrel of crude oil through the Keystone Pipeline System. This milestone demonstrates converting natural gas pipelines to oil delivery can be done safely and successfully as 864 km of pipe was converted for Keystone across the prairies in Canada.

The Eastern Mainline Project will add between 250 and 300 km of new natural gas pipeline in the Toronto/Montreal corridor where demand is strongest and more direct access can be provided to affordable new gas supplies in the northeastern United States. Our efforts will ensure that TransCanada continues to provide safe and reliable transportation of natural gas to consumers in Ontario and Québec.

For background information from the Conference Board of Canada on the economic benefits of Energy East, click here.

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