TransCanada seeks pipe approval linked to Petronas LNG terminal


Reuters

UPDATE 3-TransCanada seeks pipe approval linked to Petronas LNG terminal


(Adds comment from company involved in Pacific NorthWest,
comment from TransCanada)
    By Ethan LouCALGARY, Alberta, March 20 (Reuters) - Transcanada Corp
<TRP.TO> has secured shippers' commitment for a pipeline
associated with Malaysian state-owned oil company Petronas'
pending Pacific NorthWest liquefied natural gas (LNG) terminal
in western Canada and targets 2018 for construction, the company
said on Monday.
    Government construction approval will allow the company to
start building most of the North Montney Mainline before
majority owner Petroliam Nasional Bhd, or Petronas, decides
whether to commit to the project, TransCanada said in a
statement.
    The pipeline, however, is independent of Pacific NorthWest
and "should not be interpreted as changing any aspect of the
decision process," spokesman Shawn Howard said in a statement.
    North Montney was to provide gas to Pacific NorthWest, but
it also connects to existing systems to serve a wide range of
markets.
    "This includes deliveries to the oil sands, local
distribution companies, eastern Canada, the U.S. Midwest or to
California," Howard said.
    Canadian gas producers have been increasingly squeezed from
the lucrative eastern market by U.S. rivals, which have lower
transportation costs, and have been looking for growth in the
Asian market through LNG exports. [nL2N1GQ1UA]
    But while the Canadian government has green-lit the C$36
billion ($27.25 billion) Pacific NorthWest project in northern
British Columbia, Petronas has put off a decision on whether to
proceed with it. [nL2N1C32GS]
    Asked on Monday whether Petronas has given TransCanada any
assurances on commitment, Pacific NorthWest referred questions
to Progress Energy Canada Ltd, a subsidiary of Petronas, which
said it supports North Montney.
    Progress did not provide details on Petronas' investment
decision or its timeline. The state oil company did not
immediately respond to a request for comment.
    Canada's approval for the project came last year after a
three-year wait. Analysts have been skeptical about its
prospects, given current low gas prices and cost-cutting at
Petronas. [nL1N1D81GY]
    The project has also faced opposition from environmental and
aboriginal groups, some of which have sued.
[nL1N1CX1QY][nL4N1CW24U]
    Late last year, media reports said Petronas had identified a
new location for the plant to cut costs and address
environmental concerns. But the company has been mum about its
intentions, saying only that it will study market conditions
before determining its next steps. [nL4N1FY2ZX]
    TransCanada in its statement said construction will cost
about C$1.4 billion ($1.05 billion), and it has secured 20-year
contracts with 11 shippers for approximately 1.5 million
gigajoules per day of gas.
    "TransCanada plans to begin construction in the first half
of 2018, with facilities being phased into service over a
two-year period, beginning in April 2019," the company said.
    TransCanada was previously granted government approval for
North Montney on condition of a positive final investment
decision on Pacific NorthWest.
    Privately held Black Swan Energy Ltd confirmed it will be a
shipper on North Montney.

($1 = 1.3356 Canadian dollars)

 (Reporting by Ethan Lou; Editing by Dan Grebler and Leslie
Adler)
 ((Ethan.Lou@thomsonreuters.com; +1-403-531-1634; Reuters
Messaging: ethan.lou.thomsonreuters.com@reuters.net))

Keywords: CANADA LNG/TRANSCANADA (UPDATE 3)



This article appears in: Commodities , Stocks , Commodities , World Markets , Stocks


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