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Pedestrians pass the TransCanada buidling in downtown Calgary.

Jeff McIntosh/GLOBE AND MAIL

TransCanada Corp. has received the go-ahead for a key pipeline shipping deal, boosting fortunes of natural gas producers hit by weak prices and new competition from shale deposits in the United States.

Earlier this year, TransCanada signed up 23 companies to ship a combined 1.5 million gigajoules per day at the discounted rate of 77 cents per gigajoule from Empress, Alta. to southwestern Ontario on its cross-country mainline system. The current rate is $1.86 per GJ.

Deliveries are set to begin Nov. 1. following National Energy Board approval late on Thursday.

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The lower fees were seen as critical for western Canadian producers facing heightened competition from shale gas in the key markets of Ontario, Quebec and the northeastern United States.

Meanwhile, hopes for a boom in liquefied natural gas exports from Canada's west coast have fizzled, owing to high costs and weak global prices for the fuel. This year, state-run Petronas of Malaysia scrapped a multibillion-dollar LNG proposal, while China's CNOOC Ltd. abandoned studies for a plant.

Encana Corp., Tourmaline Oil Corp. and Birchcliff Energy Ltd. are among supporters of the revised shipping deal on the TransCanada system.

Virginia-based consultancy ICF estimated the lower tolls would result in $650-million in annual benefits for western Canada's gas producers.

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