TransCanada to Proceed with Gas Line Expansion
TransCanada Corp, Canada's second largest pipeline operator, said on Thursday that it would go ahead with the C$2.4 billion ($1.9 billion) expansion of its NGTL natural gas system, boosting pipeline access for producers in Western Canada's gas-rich basins.
The Calgary-based company also reported a strong fourth quarter profit, beating market expectations, sending its shares up 5.7 percent to C$56.71 on the Toronto Stock Exchange.
TransCanada said the expansion of its Nova Gas Transmission Line (NGTL), which moves gas from Alberta and British Columbia to markets all over North America, will boost basin export capacity by one billion cubic feet per day (bcfd).
The expansion will also connect new supply in low-cost basins like the Montney and Duvernay formations, which Canadian producers and global oil majors say could rival the most prolific U.S. shale fields. Development has so far been hampered by weak prices and limited pipeline capacity.
"This program will provide much-needed transportation solutions for Western Canadian natural gas producers and unlock access to existing Canadian Mainline capacity," said Russ Girling, TransCanada (TRP)'s chief executive, in a statement.
The NGTL expansion will include 375 kilometers (233 miles) of pipeline, compression facilities, meter stations and other facilities, the company said. It expects construction to start in 2019.
TransCanada, which also operates the Keystone pipeline from Alberta's energy heartland to U.S. markets, said it now expects to start construction on its Keystone XL expansion in 2019, with the build taking about two years to complete.
The company said in January customers committed to using about two-thirds of the capacity on its planned $8 billion Keystone XL oil pipeline, bringing the company closer to a final investment decision.
The controversial pipeline has pitted environmentalists worried about spills and global warming against industry advocates who say the project will shore up discounted Canadian oil prices and attract investment to Alberta's oil sands.
Keystone's attributable net income was C$861 million, or 98 Canadian cents per share, in the quarter ended Dec. 31, compared with a loss of C$358 million, or 43 Canadian cents, a year ago.
On an adjusted basis, the Calgary-based company earned 82 Canadian cents, beating the average analyst estimate of 77 Canadian cents, according to Thomson Reuters I/B/E/S.
Its revenue dipped to C$3.62 billion from C$3.64 billion.
Reporting by Julie Gordon
