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TransCanada sees US gas supply, demand growth seen as keys to future

TransCanada’s US natural gas pipeline business is expected to provide the company its biggest financial boost by segment through the end of the decade thanks to growing Appalachian production and Gulf Coast demand for LNG exports, the operator said Tuesday.

The efforts — designed to carry more gas to residents, businesses, industrial plants and export terminals — are bolstered by forecasts that output from the Appalachian Basin, which includes the Marcellus and Utica shale plays, will grow to over 40 Bcf/d in 2027 from 25 Bcf/d this year. The company also estimates that Gulf demand will increase by over 14 Bcf/d during the next 10 years.

The outlook highlights TransCanada’s increased focus on the US market through billions of dollars in new projects and expansions of existing pipelines. While adding long-term transportation contracts provides stability, the strategy also comes with potential roadblocks, especially on the regulatory front amid aggressive resistance from environmental and community groups.

“As a company, we are prepared for those challenges that lie ahead,” CEO Russ Girling said during TransCanada’s annual investor day presentation webcast from Toronto. “While pipelines aren’t perfect, we continue to believe they are by far the safest and most efficient method of moving both natural gas and crude oil to markets that need them.”

KEYSTONE XL QUESTIONS

On the oil front, TransCanada has been working on boosting optionality through upgrades and cross-border opportunities.

The company filed a “procedural” motion last week with the Nebraska Public Service Commission seeking permission to raise questions regarding the state regulator’s decision on the new routing of the proposed Keystone XL crude pipeline, Dean Patry, senior vice president of TransCanada’s liquids pipelines unit, said during the presentation.

NPSC spokeswoman Deb Collins said in an email that TransCanada’s motion for reconsideration is a routine filing with the commission having 60 days to rule on it.

The NPSC ruled in a 3-2 vote on November 20 approving the company’s “mainline alternative” for its Keystone XL pipeline, rather than the direct route.

The alternate route in eastern Nebraska heads east sooner toward the existing Keystone pipeline and parallels it for 96 miles.

The Keystone XL pipeline is aimed at delivering 830,000 b/d of Western Canadian heavy barrels from Hardisty, Alberta, to Steele City, Nebraska, from where crude will flow along the existing Keystone pipeline to either Cushing, Oklahoma, or Patoka, Illinois.

A mainline alternate route will unlikely result in any cost inflation for the planned project, which will require an estimated $6.3 billion (C$8 billion) investment, Patry said.

Separately, the 1,179-mile Keystone pipeline that was shut in since a leak in South Dakota on November 16, was started up Tuesday, TransCanada spokesman Matthew John said in an email.

TransCanada said late Monday the 600,000 b/d pipeline that runs from Hardisty to Cushing and Patoka will be started up at low pressure before crude throughput would be ramped up.

FERC APPROVALS COULD ‘SLIP INTO JANUARY’

At home, TransCanada has already faced headwinds on several projects and recently scrapped three of them.

In the US, the company received a bit of good news on the gas side earlier this month when Columbia Gas Transmission won certificate approval from the Federal Energy Regulatory Commission for the 1.3 Bcf/d WB XPress gas pipeline expansion. It is holding to an expected November 2018 startup on the western path, but the eastern path could be delayed a month or two, Stan Chapman, president of TransCanada’s US natural gas pipelines business, told investors.

But Columbia Gas’ largest expansion, the 2.7 Bcf/d Mountaineer XPress project, and the proposed Gulf XPress project on Columbia Gulf Transmission are still awaiting FERC nods. While the company still expects those two projects to be approved by the end of the year, it is possible that go-ahead could “slip into January,” Chapman said. TransCanada said that under that scenario, it believes it would be able to maintain the projects’ in-service dates.

In its investor presentation, TransCanada maintained that it expected its under-construction Leach XPress project to be in service early next year. It was recently delayed from its scheduled November 1 in-service date. Once in service, the project will add up to 1.5 Bcf/d of incremental production-takeaway capacity from core producing counties in the US Northeast to flow toward markets in the US Southeast region.

“We are starting to see the benefits of years of negotiations and hard work,” Chapman said.
Source: Platts

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