TransCanada sanctions LNG Canada feeder pipeline construction

TransCanada Corporation will proceed with construction of the Coastal GasLink pipeline project following the final investment decision on LNG Canada, a major liquefied natural gas export project in Kitimat, British Columbia.

The Shell-led LNG Canada joint venture including Petronas, PetroChina, Mitsubishi Corporation and Kogas, has taken a final investment decision on C$40 billion ($31 billion) LNG Canada with the construction expected to start immediately.

Coastal GasLink is a 670-kilometer (420 miles) pipeline designed to transport natural gas from the Montney gas-producing region near Dawson Creek, B.C. to the LNG Canada facility in Kitimat.

The pipeline will have an initial capacity of approximately 2.1 billion cubic feet per day (Bcf/day) with the potential for expansion of up to approximately 5 Bcf/day.

Construction activities are expected to begin in early 2019 with a planned in-service date in 2023, TransCanada said in its statement.

The estimated Cdn$6.2 billion ($4.8 billion) project is underpinned by 25-year transportation service agreements (with additional renewal provisions) entered into with the LNG Canada participants and includes pre-development costs to date of approximately $470 million. The majority of the spend on construction will occur in 2020 and 2021, TransCanada said.

The Coastal GasLink project was first proposed in 2012 after TransCanada was selected as LNG Canada’s pipeline partner of choice to design, build, own and operate the pipeline system.

LNG Canada will initially export LNG from two trains totaling 14 million tonnes per annum (mtpa), with the potential to expand to four trains in the future.