Canada: Transcanada Wants To Build New Pipeline Before PNW LNG Facility Proceeds

On March 20, 2017, TransCanada Corporation (through its affiliate NOVA Gas Transmission Ltd.) filed an application with the National Energy Board (NEB) asking to amend conditions of approval for the North Montney Mainline natural gas pipeline project (the NMML). The NEB had approved the NMML project in June 2015, subject to certain conditions, including that the project proponent for the Pacific Northwest LNG project (PNW LNG) had made a "final investment decision" to proceed with that project. The condition was included because the need for the NMML was largely tied to providing supply for the PNW LNG project.

The NMML project is planned to connect the Montney basin in northeast British Columbia to TransCanada's system, and would include connection to the proposed Prince Rupert Gas Transmission project that would transport supply from northeast British Columbia (see here). As we have previously discussed, the PNW LNG project has been approved by the Federal Government, but it is not clear if or when a "final investment decision" will be made by the project proponent.

In its current application, TransCanada indicates that it is not necessary to wait for the PNW LNG project before proceeding with most of the planned NMML project. TransCanada asserts that gas producers in the North Montney area continue to advance development plans and have committed to contract for capacity on the NMML project to link to the TransCanada (NOVA) system. These commitments are not contingent on the PNW LNG project. Therefore, TransCanada seeks the NEB's approval to proceed with the majority of the already-approved NMML project and commence construction in 2018.

TransCanada indicates that it may proceed with the balance of the NMML project (the aspects that directly relate to the PNW LNG project) in the event that there is a positive final investment decision made on the PNW LNG project. However, TransCanada notes that there is currently a "sunset clause" of June 10, 2107 on the approval of the NMML project. TransCanada requests an extension of this sunset clause.

The NEB has not yet issued any response or process related to TransCanada's application.

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