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TransCanada may scrap Energy East and Eastern Mainline pipeline projects

EBR Staff Writer Published 08 September 2017

TransCanada’s $12bn Energy East pipeline and the Eastern Mainline projects are in doubt after the company filed a letter to Canada’s National Energy Board (NEB) seeking a 30-day suspension of their applications.

The move from TransCanada comes after last month’s decision from the Canadian energy regulator to cover a wide range of topics before making a decision on the approval of the projects.

According to TransCanada, the 4,600km Energy East pipeline will run from Alberta and Saskatchewan to Eastern Canada refineries to transport 1.1-million barrels of crude oil per day.

On the other hand, the Eastern Mainline project will see construction of a new natural gas pipeline and compression facilities to the company’s existing Canadian Mainline system in Southern Ontario to serve as a safe and diverse source of natural gas.

TransCanada says that the suspension of the two projects for 30 days will give it time to carefully assess the recent changes brought in by the regulator pertaining to the list of issues and environmental assessment factors.

It also expects to get space to determine how the changes would affect the costs, schedules and viability of the two projects.

TransCanada stated that it will stop recording Allowance for Funds Used During Construction (AFUDC) for the projects from the date of the regulator’s announcement of modifying terms of its review process.

This, it said was the outcome of the major changes brought by NEB in its regulatory process along with the company’s request for the suspension of the applications for a period of 30 days.

A decision to scrap the projects will negatively impact its ability to recover development costs spent till date, stated the energy company.

TransCanada president and CEO Russ Girling said: “Apart from Energy East, we will continue to advance our $24 billion near-term capital program in addition to our longer-term opportunities.

“Our portfolio of high quality projects is expected to generate growth in earnings and cash flow to support an expected annual dividend growth rate at the upper end of an eight to 10 per cent range through 2020.”

Image: TransCanada head office in Calgary, Alberta. Photo: courtesy of Qyd/Wikipedia.