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TransCanada wins transportation contracts for U.S. natural gas pipeline

TransCanada president and CEO Russ Girling speaks at an event in Toronto on Wednesday, January 15 , 2014.

Chris Young/THE CANADIAN PRESS

TransCanada Corp. has secured almost two billion cubic feet a day of firm natural gas transportation commitments on its U.S.-based ANR pipeline system Southeast Main Line over the next two decades.

Approximately 1.25 billion cubic feet a day will flow this year on the system that provides market access to points including Michigan, Chicago and Wisconsin, as well as the U.S. Gulf Coast. The remaining volume will commence in 2015, according to a news release from the Canadian pipeline giant.

"Essentially 100 per cent of the existing firm capacity on the ANR Southeast Main Line system has now been subscribed and TransCanada is reviewing several options for further expansion to accommodate additional volumes," company chief executive Russ Girling said in the news release.

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The new contracts will see Utica and Marcellus shale gas moved to points north and south on the pipeline system. The project will also allow more natural gas to flow south to the Gulf Coast, "where markets are experiencing a resurgence of natural gas demand for industrial use, as well as significant new demand related to natural gas exports from recently approved liquefaction terminals," according to TransCanada.

Capital costs associated with the ANR system expansion are estimated at $100-million. RBC Dominion Securities Inc. analyst Robert Kwan said the news is a positive development for TransCanada.

"The securing of additional contracts for the ANR pipeline (is) expected to result in a material improvement in (earnings before interest, taxes, depreciation, and amortization) following a multi-year downward trend in results," Mr. Kwan wrote in a note Monday.

"Further, the average term of 23 years for the new contracts enhances stability of results on the ANR system."

TransCanada owns or partially owns more than 68,500 kilometres of North American natural gas pipelines.

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