TransCanada to Further C$1.9B Pipeline Project - Analyst Blog

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On Jun 4, NOVA Gas Transmission Ltd., a wholly-owned subsidiary of the pipeline operator TransCanada Corp. ( TRP ), entered into an agreement with the Canadian arm of the U.S. energy firms Chevron Corp. ( CVX ) and Apache Corp. ( APA ) to provide natural gas transportation services through its planned Merrick Mainline Pipeline.

The Pipeline will transport about 1.9 billion cubic feet (Bcf) of natural gas per day through NOVA Gas' pipeline system and will be linked to Chevron and Apache's proposed Pacific Trail Pipeline that will transport the gas to Kitimat LNG Terminal.

Spread across 260 kilometers, the Merrick Mainline Pipeline Project is expected to cost C$1.9 billion. TransCanada's management stated that it currently has four main natural gas pipelines under development with an investment base of C$12.6 billion.

The Merrick Mainline Pipeline Project is progressing well. TransCanada plans to apply for necessary approvals to build the project in the final quarter of the year. The pipeline construction also depends on the Kitimat LNG project receiving a positive Final Investment Decision (FID). The company expects the pipeline to commence operations in the first quarter of 2020.

The company mentioned that under the commercial agreement with Chevron and Apache, the delivery volume should be an average of 1.9 Bcf per day between 2020 and 2022. The proposed pipeline project is an important part of the company's growth plans. TransCanada's growth plan includes completion of several commercial projects by the end of 2020 with a total investment plan of C$38 billion.

Calgary-based TransCanada currently has a Zacks Rank #3 (Hold), implying that it is expected to perform in line with the broader equity market in the next one to three months.

Meanwhile, one can consider a better-ranked player from the oil production and pipeline industry such as EQT Midstream Partners, LP ( EQM ). The partnership sports a Zacks Rank #1 (Strong Buy).


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CVX , APA , TRP , EQM

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