Sunday, June 12, 2016

After Keystone XL:  TransCanada Building North American Fracked Gas Pipeline Empire

Stop Keystone XL Protesters (Image Credit: U.S. Commercial Service) Click to Enlarge
Though President Barack Obama and his State Department nixed the northern leg of TransCanada's Keystone XL tar sands pipeline in November, the Canadian pipeline company giant has continued the fight in a federal lawsuit in Houston, claiming the Obama Administration has violated the North American Free Trade Agreement (NAFTA).

As the NAFTA lawsuit works its way through pre-trial hearings and motions — and as Keystone XL has become a campaign talking point for Republican Party presidential candidate Donald Trump — TransCanada has quietly consolidated an ambitious North America-wide fracked gas-carrying pipeline network over the past half year.

Since Keystone XL North got the boot, TransCanada has either won permits or announced business moves in Canada, the United States, and Mexico which will vastly expand its pipeline footprint and ability to move gas obtained via hydraulic fracturing (“fracking”) to market.

Oh Canada
North of the U.S. border, TransCanada landed the last permits it needed from the British Columbia Oil and Gas Commission on May 5 to build its proposed Coastal GasLink pipeline project.  Coastal GasLink aims to carry gas obtained via fracking from the Montney Shale westward to LNG Canada’s proposed liquefied natural gas (LNG) export facility in Kitimat, B.C.

“This is a significant regulatory milestone for our project, which is a key component of TransCanada's growth plan that includes more than $13 billion in proposed natural gas pipeline projects which support the emerging liquefied natural gas industry on the British Columbia Coast,” Russ Girling, TransCanada's CEO said in a press release. 

Coastal GasLink awaits a final investment decision from LNG Canada by the end of the year. If it gets the green light, pipeline construction of the 416-mile line will begin in early 2017.

Build Them or Buy Them?
In the U.S., while TransCanada's NAFTA lawsuit drags on, the corporation also announced a major $13 billion buy-out acquisition of pipeline behemoth Columbia Pipeline Group on March 17. 

Columbia maintains a gargantuan 15,000-mile network of gas pipelines running across the U.S., with a crucial hub of crisscrossing pipelines based in the prolific Marcellus Shale basin, an epicenter for fracking in the northeast, particularly Pennsylvania.  In a press statement announcing the deal, Girling pointed out just how big his company's gas-carrying pipeline capacity has become in the U.S. and its nascent potential ability to carry that gas to U.S.-based LNG export terminals.

“The acquisition represents a rare opportunity to invest in an extensive, competitively-positioned, growing network of regulated natural gas pipeline and storage assets in the Marcellus and Utica shale gas regions,” Girling said in the company's press release announcing the Columbia deal.  “The assets complement our existing North American footprint which together will create a 91,000-kilometre (57,000-mile) natural gas pipeline system connecting the most prolific supply basins to premium markets across the continent.  At the same time, we will be well positioned to transport North America's abundant natural gas supply to liquefied natural gas terminals for export to international markets.”

The deal has yet to be sealed, however, awaiting both a final shareholder vote on June 22 and antitrust approval by the U.S. Federal Trade Commission.  Wall Street giant Goldman Sachs acted as the financial adviser for the sale. 

Kevin Allison, global resources columnist at Reuters Breakingviews, pointed to the acquisition of Columbia by TransCanada as an example of its shifting business strategy post-Keystone XL (even though the lawsuit, most certainly, is also part of the company's business strategy). Rather than focusing on building new lines, he says TransCanada increasingly sees profit margin opportunities in buying ones already permitted and pumping oil and gas, like those owned by Columbia.

Read more at After Keystone XL:  TransCanada Building North American Fracked Gas Pipeline Empire

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