Canadian Natural Gas Pipeline Report 2017: Expanding Natural Gas Pipeline Capacity a Priority in Canada

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Canada is blessed with one of the world’s largest stores of natural energy resources. However, the country’s oil and natural gas pipelines don’t provide enough access to Canadian residents and businesses, according to Tim McMillan, president and CEO of the Canadian Association of Petroleum Producers.

“The need for increased market access for Canada has never been greater,” McMillan says. “Historically, the U.S. has been Canada’s biggest customer and now it is quickly becoming our biggest competitor as production from U.S. shale plays continues to rise. We can no longer rely on the U.S. to secure our energy future.”

In order to provided increased natural gas access, Canadian companies seek to expand pipeline capacity throughout the provinces. What follows is an overview of many of the natural gas pipeline projects currently under way or in the permitting process.

RELATED: 2017 Canadian Oil Pipeline Report

Canadian Mainline Expansion

Location: Ontario
Stakeholder(s): TransCanada Corp.
Overview: TransCanada is looking to expand its natural gas pipeline capacity in eastern Canada. The company announced July 28 that it will apply to the National Energy Board (NEB) to expand the capacity of the Canadian Mainline System through its Maple Compressor Station near Vaughan, Ontario. The approximately $160 million project is underpinned by 15-year contracts and will increase capacity to the southern Ontario market, as well as provide delivery to Atlantic Canada through the Trans Quebec & Maritimes Pipeline (TQM) and Portland Natural Gas Transmission System (PNGTS). The proposed project will add incremental compression and associated facilities on the Canadian Mainline to move approximately 80 million cubic feet per day (MMcf/d) of additional natural gas capacity. Once TransCanada has completed its tariff process for capacity additions, an application to approve the associated facilities is expected to be filed with the NEB in early 2018, to meet a Nov. 1, 2019, in-service date.

Coastal GasLink Pipeline Project

Location: British Columbia
Stakeholder(s): TransCanada, 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. Field work continues to gather further details about potential routing. However, in July 2016, LNG Canada announced that due to the challenges of the current global energy market, their joint venture participants have determined they need more time prior to taking a final investment decision. LNG Canada has assured Coastal GasLink that the project is not being canceled, but the project remains delayed.

Eastern Mainline Project

Location: Ontario
Stakeholder(s): TransCanada PipeLines Ltd.
Overview: After years of regulatory hurdles and opposition from environmental groups, TransCanada Corp. announced that it will no longer be proceeding with its proposed Eastern Mainline projects. “We appreciate and are thankful for the support of labour, business and manufacturing organizations, industry, our customers, Irving Oil, various governments, and the approximately 200 municipalities who passed resolutions in favour of the projects,” said Russ Girling, TransCanada president and CEO. “Most of all, we thank Canadians across the country who contributed towards the development of these initiatives.”As a result of its decision not to proceed with the proposed projects, TransCanada is reviewing its approximate $1.3 billion carrying value, including allowance for funds used during construction (AFUDC) capitalized since inception and expects an estimated $1 billion after-tax non-cash charge will be recorded in the company’s fourth quarter results. TransCanada stopped capitalizing AFUDC on the project effective Aug. 23, 2017, as disclosed on Sept. 7, 2017. In light of the project’s inability to reach a regulatory decision, no recoveries of costs from third parties are expected.

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 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 6- and 4-in. XHP steel pipeline and 6-in. high pressure polyethylene natural gas pipeline. Enbridge applied to the Ontario Energy Board (OEB) for approval to begin construction on July 26.

NEXUS Gas Transmission Project

Location: Ontario
Stakeholder(s): Enbridge, Spectra Energy and DTE Energy
Overview: The proposed NEXUS Gas Transmission Project (NGT) was originally a joint venture between Enbridge, Spectra Energy and DTE Energy. However, Enbridge acquired Spectra in February. NEXUS 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. In August, NEXUS received a certificate of public convenience and necessity from the Federal Energy Regulatory Commission (FERC) to construct and operate the project. This approval authorizes NEXUS, subject to certain conditions, to proceed with final preparations to commence construction to meet an in-service date in 2018. NEXUS plans to provide an updated in service date once we review the certificate order and construction plans.

NGTL System Expansion Project

Location: Alberta
Stakeholder(s): NOVA Gas Transmission Ltd., TransCanada
Overview: TransCanada announced in June that it was moving forward with a $2 billion expansion program for a natural gas pipeline in western Canada. The project will add approximately 3 Bcf/d of incremental firm receipt and delivery services on its NOVA Gas Transmission Ltd. (NGTL) System, based on new contracted customer demand. This expansion program results from growing producer demand to connect low-cost Montney, Duvernay and Deep Basin production to the NGTL System and move it to premium intra-basin and export markets. Numerous shippers have signed more than 2.6 Bcf/d in total new firm supply contracts at multiple existing and proposed new receipt locations across the system. TransCanada also successfully concluded an expansion open season for incremental service at the Alberta/British Columbia export delivery point, which connects Canadian supply through downstream TransCanada pipelines to Pacific Northwest, California and Nevada markets. The open season was over-subscribed, and all 381 MMcf/d of available expansion service was awarded under long term contracts. The expansion program will be comprised of numerous projects that will in aggregate, include 273 km of 16- to 48-in. pipeline, 150 MW of compression at five compressor stations, new meter stations and other associated facilities. Applications for the various projects will be filed with the NEB starting in the fourth quarter of 2017. Subject to regulatory approvals, construction is expected to start in early 2019, with initial projects expected to be in service in the fourth quarter of 2019 and final projects in service by the second quarter of 2021.

Towerbirch Expansion Project

Location: Alberta, British Columbia
Stakeholder(s): NGTL
Overview: Construction is under way on the Towerbirch project, an extension to the NGTL System, consisting of pipeline originating 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. The pipeline component has two sections for a total length of 88 km. The first section is 36-in. diameter pipeline that begins in Saddle Hills County, continues west for approximately 56 km and ties into the existing Tremblay Complex. The second section is 30-in. diameter pipeline that begins at the Tremblay Complex, continues north for approximately 32 km and terminates at the proposed Tower Lake Receipt Meter Station site. Other facilities include valve sites, the Tower Lake Receipt Meter Station and the Dawson Creek North and No. 2 Receipt Meter Stations. The project received federal approval in July and began construction shortly thereafter. The pipeline is expected to be in service the fourth quarter of 2017.

This listing originally appeared in the August 2017 issue of North American Oil & Gas Pipelines, a sister publication of Trenchless Technology Canada. This is not a comprehensive list of the pipeline projects. For updates regarding ongoing projects, visit napipelines.com.

North American Oil & Pipelines will provide a report on Canadian oil pipeline projects in our Spring 2018 issue.

Bradley Kramer is managing editor of North American Oil & Gas Pipelines and contributing editor to Trenchless Technology Canada.

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