TransCanada reaches agreement with local gas distribution companies on Energy East, Eastern Mainline pipeline projects

TransCanada Corporation announced on Monday that it has reached an agreement with Gaz Metro Limited Partnership (GMi), Enbridge Gas Distribution Inc. and Union Gas Limited that resolves these local gas distribution companies’ issues with the Energy East and Eastern Mainline pipeline projects.

Under the terms of the agreement, TransCanada will size the Eastern Mainline Project to “meet all firm requirements, including gas transmission contracts resulting from both 2016 and 2017 new capacity open seasons, plus approximately 50 [million cubic feet per day] (MMcf/d) of additional capacity,” TransCanada said in a press release. TransCanada will also ensure a “long-term benefit to gas consumers in eastern Ontario and Quebec (Eastern Triangle) of at least $100 million through to 2050.”

“The agreement ensures that Energy East and the Eastern Mainline Project will provide gas consumers in Eastern Canada with sufficient natural gas transmission capacity and reduced natural gas transmission costs,” the company said in the release.

Russ Girling, TransCanada’s president and CEO, added that “it has always been our intent to ensure our customers in Quebec and Ontario would receive the gas they needed and we have done that through this agreement. We have also maintained that re-purposing a portion of the Canadian Mainline for Energy East would make the system more efficient and reduce transportation costs to our customers.”

Energy East is a proposed 4,600-kilometre oil pipeline that will have the capacity to transport 1.1-million barrels of crude oil per day from Alberta and Saskatchewan directly to refineries and port terminals in Eastern Canada. The project will generate thousands of good paying jobs and millions of dollars in annual tax revenues to fund healthcare, build roads and schools in local communities along the pipeline’s route, TransCanada reported.

The Conference Board of Canada has concluded the project will support 14,000 direct and indirect full-time jobs across Canada during development and construction, and generate more than $7 billion in additional tax revenues in the first 20 years of operation for local, provincial and federal governments, along with $36 billion in GDP growth across the country.

A Fraser Institute report released last week highlighted, in part, that pipelines are safer than rail when transporting crude oil to market. The study concluded that while both modes of transportation are safe, transporting oil through pipelines is four-and-a-half times safer than oil by rail. Pipelines remain the safest, most efficient and least greenhouse gas-intensive way of transporting large volumes of crude oil to market, TransCanada said.

TransCanada proposes to convert 3,000 kilometres of one of its Canadian Mainline pipelines that is currently not fully contracted on a firm basis from natural gas to oil service for Energy East. “This conversion will lower the comparative cost of transmission service for local natural gas companies, power producers and industrial clients we serve, primarily through the reduced owning and operating costs of a smaller Canadian Mainline system,” the release noted.

The Eastern Mainline Project will add between 250 and 300 kilometres of new natural gas pipeline in the Toronto/Montreal corridor where demand is strongest and more direct access can be provided to affordable new gas supplies in the northeastern United States.