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.
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Dannyboy
18 weeks ago
Great timimg
I can just picture Dix at the ribbon cutting ceremomy now
Hakuin
18 weeks ago
As I understand it
An LNG tanker catching fire can create a BLEVE comparable to a tactical nuke.
Stephen Cooley
18 weeks ago
Bleve
No radioactive fallout!
The more probable accident would vent the gas and spill the ship's fuel.
The sure ecological disaster will be to the lands of the gas fields and to our children when they have to use coal because we sold all our gas for pieces of silver.
Cool Hand
18 weeks ago
Petronas
So far, energy major Malaysian Petronas has commenced:
1. Initial $1.1 Billion JV with Progress Energy;
2. $5.3 Billion acquisition of Progress Energy;
3. Planned 18 million ton/annum lng terminal (at full build-out) on Lelu Island in Prince Rupert. Based upon lng facility capital costs of $1.5 Billion to $3 Billion per million ton capcity in Australia, we are looking at ultimate lng terminal capital investment of between $27 Billion - $54 Billion;
4. Trans-Canada's involvement now as Petronas' pipeline operator from NE BC to the coast at $5 Billion is likely a conservative estimate as Spectra has also entered into a pipeline agreement with neighbouring BG Group at a cost of between $6 - $8 Billion;
5. Petronas field development in NE BC will also run into the $10's Billions over the next couple of decades plus;
The capital costs here are staggering/phenomenal and this one lng project alone blows anything previously done in BC outta the water.
Then figure in Chevron, Shell, ExxonMobil, British Gas (BG) Group's proposals and one can see how this new lng industry will be a game-changer for BC economically.
Of course, Petronas has not yet made application to the NEB, BCEAO and has not yet commenced with front end engineering and design (FEED), which will take considerable time and up to $100 million+ in additional costs.
After that the final investment decision (FID) will be made, likely in the 2015 time frame. Then construction commences on both terminal and pipeline and completion won't be until 2018/2019 at the earliest.
Hakuin
18 weeks ago
Very fair
Since the companies get all the profits, the communities can have all the risks.
pwlg
18 weeks ago
more than optimistic
Cool Hand's #3 is not in tune with a Vancouver Sun article on December 5, 2012.
"The investment is estimated at between $9 billion and $11 billion to build two liquefaction plants, referred to as trains, capable of producing 3.8 million tonnes per train of LNG a year."
The capital cost estimates provided by Cool Hand are some 3 to 6 times greater than what has been reported.
However, the US Energy Information Administration reported last January that if just all 9 proposed LNG export plants for Louisiana are built it would increase domestic natural gas prices by 36% over 5 years.
The flow of our natural gas to export markets may be well subsidized by us through higher domestic rates.
One bright note in all of this is what LSU Center for Energy Studies director David Dismukes had to say about proposals for these plants, “The rule of thumb is half the projects put down on paper get developed, if that much.”
When it comes to energy security in our own land, at what point will our regulators and more importantly intelligent legislators put their foot down and say no more exports.
Our relatively cheap energy allows us to compete in other economic sectors. The gain in one sector means a loss in another if it causes energy prices at home to increase.
Many industries and businesses in industrial and manufacturing are operating on thin margins already. Higher energy prices will force them to close their doors and lay off workers.
We have already seen an appreciable erosion of Canada's manufacturing sector in terms of job loss, revenue to governments and increasing social costs.
Just like a candle we are going to be burnt from both ends.
Cool Hand
18 weeks ago
pwlg
Sigh. Sorry, but you are referring to pre-conceptual and dated info, which the Sun obviously overlooked to update.
I will repeat.
Petronas' planned 18 million ton/annum lng terminal (at full build-out) on Lelu Island in Prince Rupert. Based upon lng facility capital costs of $1.5 Billion to $3 Billion per million ton capacity in Australia, we are looking at ultimate lng terminal capital investment of between $27 Billion - $54 Billion;
Sources:
1. "At $US3.016 billion per million metric tonnes per annum (mmtpa) of LNG export capacity [in Australia], capital intensity of the LNG projects under construction was 2.5 times more expensive than the global average of $US1.212 billion.
http://www.maribyrnongweekly.com.au/story/1129412/santos-warns-against-gas-reservation/?cs=9
2. Back of the envelope "figures compiled by engineering and construction firm Bechtel suggest the numbers could be much higher, ranging as high as $22.5-billion" [for BC's Petronas lng facility for just 2 of 3 liquefaction trains].
http://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/petronas-to-sweeten-payoff-if-ottawa-okays-progress-deal/article5954680/
3. "The billion dollar question is what a 10 million tons per annum LNG facility [by Chevron] will cost at Kitimat?” Greg Pardy, an lng analyst with RBC Capital, said in a report. “If Australia’s experience is any guide, $2,500 to $3,000 per tpa may not be unreasonable, suggesting a $25-billion to $30-billion price tag for Kitimat
http://business.financialpost.com/2012/12/27/chevrons-move-into-canadian-lng-to-help-natural-gas-sector-compete-with-australia/
So yes, again, we are likely looking at $1.5 billion to $3 billion per million metric ton capacity for any lng facility built on BC's west coast.
Frankly, the lower the cost the better for the economics. The intense labour required for construction, in competition with Alberta, will likely make the figure in the mid to higher range at the end of the day.
Frank
18 weeks ago
I guess BCers will never need energy.
So we might as well give it away to compenies and let them make a big profit selling it all off.
Because we know they'll take care of us when the energy is gone and we need a way to keep the lights on.
Cool Hand
18 weeks ago
pwlg
PS
Sorry. Another error by the Sun.
The Petronas facility will have 3 liquefaction trains, each producing 6 million tons/annum, for a total of 18 million tons capacity at full build-out.
The initial capacity will be 12 million tons/annum with the final liquefaction train estimated to placed on-line within several years after completion of the first two.
http://pacificnorthwestlng.com/
Hakuin
18 weeks ago
worth perusal
http://ncadac.globalchange.gov/