TransCanada Corp. has been selected to build a $5-billion pipeline connecting the growing volumes of B.C. shale natural gas to the West Coast for export.
The Calgary-based company announced Wednesday that it will design, build, own and operate the proposed Prince Rupert Gas Transmission project for Progress Energy, which is now a subsidiary of Malaysian state-owned firm Petronas.
TransCanada will also spend as much as $1.5 billion to extend an existing transmission line to serve Progress and other gas suppliers.
Progress is proposing to build a facility on Lelu Island near Prince Rupert, B.C., where natural gas will be chilled into a liquid state, enabling it to be shipped to lucrative markets across the Pacific by tanker.
This is the second such project to be awarded to the pipeline giant in the past year.
In June, TransCanada was chosen by a Royal Dutch Shell-led consortium to build the $4-billion Coastal GasLink pipeline between northeastern B.C. shale fields and an LNG facility proposed for Kitimat, B.C., to the southeast of Prince Rupert.
"Together with our previously announced Coastal GasLink Pipeline project, this is the second major natural gas pipeline proposed to Canada's West Coast for TransCanada -- demonstrating the confidence that LNG sponsors continue to place in our ability to design, build and safely operate pipeline systems," TransCanada CEO Russ Girling said in a release.
Progress was recently acquired by Malaysia's state-owned energy company in a $6-billion deal that was approved by Ottawa in December.
With backing from Petronas, the Prince Rupert LNG terminal will be 60 per cent larger than it would have been if the takeover had been blocked.
The LNG facility is expected to include two plants capable of processing six million tonnes of gas annually.
TransCanada, one of North America's largest pipeline companies, has sparked widespread debate from politicians, environmentalists, local groups with its efforts to build the Keystone XL oil pipeline between Alberta and refineries in the southern United States.
But TransCanada also has a long history of operating natural gas lines in Canada and the United States, a point that chief executive Russ Girling emphasized in announcing the company's latest major project.
"TransCanada has an industry leading safety record that we are extremely proud of, and we look forward to involving the skilled workforce in B.C. and across Canada to help us develop an important new component of B.C.'s growing natural gas infrastructure," Girling said..
TransCanada proposes to extend its existing Nova gas transmission system in northeast B.C. to connect both to the Prince Rupert transmission project and to additional gas supply in the North Montney formation.
The company said the extensions to the Nova system will cost an estimated $1 billion to $1.5 billion.
Desjardins Securities analyst Pierre Lacroix called the latest contract an "unexpected positive development."
"The announcement further demonstrates (TransCanada's) ongoing efforts to secure earnings growth beyond Keystone XL in the latter half of this decade," he wrote in a note to clients.
TransCanada's shares were up 96 cents to $48.21 per share in mid-day trading on the Toronto Stock Exchange -- a gain of two per cent.
Lauren Krugel reports for the Canadian Press.