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Canada is getting closer to opening its first liquid natural gas (LNG) export terminal now that TransCanada Corp. has received conditional approval to build a pipeline to supply the facility.
If given final approval, the 560-mile conduit, called the Prince Rupert Gas Transmission line, would connect the rich Montney gas field in northeastern British Columbia with the Pacific Coast. From there the gas will be exported.
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“This development is a significant step forward,” TransCanada CEO Russ Girling said in a statement on June 12. “The conditional positive final investment decision advances a key component of TransCanada’s C$46 billion capital growth plan.”
Girling has a right to be pleased, even relieved. The tentative approval for the pipeline represents rare good news for TransCanada, which in the past few years has had seemingly insurmountable trouble winning approval for crude oil pipeline projects, in particular the proposed Keystone XL conduit that would bring Canadian oil sands from Alberta to the U.S. coast of the Gulf of Mexico.
Oil aside though, TransCanada, based in Calgary, has invested generously in LNG, and has deals to build gas pipelines costing a total of more than C$13 billion to several export terminals on Canada’s Pacific coast. The Prince Rupert pipeline would add C$5 billion (US$4.06 billion) to that investment.
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The tentative approval for the pipeline came from a joint venture that owns the Pacific NorthWest LNG terminal. The consortium is run by Petroliam Nasional Bhd, or Petronas, the state-owned Malaysian oil company. Petronas said the initiative still must satisfy several environmental and regulatory guidelines, as well as meet the concerns of First Nations residents of the area, who opposed building the pipeline.
Canada’s National Energy Board in Ottawa also has given its blessing to TransCanada’s pipeline proposal. It recommended in April that the Ottawa government give its final approval, calling the project a “critical component” linking Canada’s expanding gas sector and existing and emerging markets.
Also in the works is a second pipeline associated with the Petronas LNG terminal project, the C$1.7 billion North Montney Mainline, which would be a tributary of the Prince Rupert pipeline. This project was approved by the Canadian government on June 11. As for the Prince Rupert conduit, Girling said TransCanada is ready to begin building it soon and bring it online as early as 2019.
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Rich Coleman, British Columbia’s deputy premier, who is in charge of natural gas development, said he believes the provincial government has played a key role in strengthening Canada’s LNG industry and putting it on the path to becoming the country’s largest source of private investment.
The National Energy Board says the country’s conventional gas exports have declined in favor of growing U.S. production of shale gas. Coleman said his office intends to reverse that trend, and to do so responsibly. “The province of British Columbia will continue to work with all partners to ensure the project is developed with the highest standards of environmental protection and enhancement.”
By Andy Tully of Oilprice.com
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Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com