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A TransCanada natural gas compressor station.

TransCanada Corp. is moving ahead with a $2-billion expansion to its pipeline system in Alberta and British Columbia as industry hopes for a boom in liquefied natural gas exports fade.

Calgary-based TransCanada said on Wednesday that plans for new capacity on its Nova Gas Transmission Ltd. (NGTL) system are backed by firm contracts with producers to ship roughly three billion cubic feet of natural gas a day.

The project adds to a $5.1-billion program aimed at boosting pipeline capacity in the Montney and Deep Basin exploration zones, where producers have been hampered by weak prices owing in part to shipping constraints.

TransCanada's NGTL system spans more than 24,000 kilometres and serves as a hub for shipments from Alberta and B.C. to the wider North American market. The company is plotting expansions as plans for West Coast LNG plants have stalled indefinitely, prompting companies to seek alternative outlets for fast-growing production.

The industry had hoped to load tankers with the superchilled gas for export to energy-thirsty Asian markets, lifting domestic prices and breaking dependence on the United States as the top consumer of Canadian exports.

But plans for the hugely expensive plants have faced push-back on environmental grounds, while a glut of fuel supplies has depressed global prices. Only one of 19 proposals, the Woodfibre LNG project, is set to break ground. Producers have moved on.

"Our gas in the medium-term is going to go east, not west," said David Maddison, president and chief executive officer of private Montney explorer Black Swan Energy.

"And if you look at any of those projects that are West Coast LNG, there's still quite a bit of uncertainty about them. They tend to be projects with relatively long construction phases, so it's not something you're going to be able to depend on in the short term."

Black Swan is among nearly a dozen companies that have signed up for new capacity on another TransCanada project under development, known as the North Montney mainline. That pipeline would connect to larger conduits, enabling the company to ship growing volumes as far as Ontario and Quebec.

Earlier this year, TransCanada sought clearances from regulators to build portions of the $1.4-billion project, which had previously hinged on construction of a multibillion-dollar export plant proposed by state-run Petronas of Malaysia.

Prime Minister Justin Trudeau approved the $11.4-billion Petronas project last year, but plans have been pushed to the back burner in part owing to opposition from First Nations near the proposed site at Lelu Island, B.C.

TransCanada said its latest expansion comprises 273 kilometres of new pipe and related facilities. The company aims to start construction in early 2019, pending approvals from the National Energy Board.

It also has secured contracts for 381 million cubic feet a day of new capacity to move gas south to the U.S. Pacific Northwest, California and Nevada markets.

The demand shows producers developing vast new reserves are actively scouting for markets while they await clarity on potential Pacific exports, TransCanada vice-president Karl Johannson said in an interview.

"There's such a great warehouse of gas there right now that they can do both," he said. "They can service these markets if they want and if LNG comes along, they can increase their production to service that. It's not an either/or any more."

Kinder Morgan Canada’s president says he’s willing to meet with B.C.’s Greens and NDP on the Trans Mountain pipeline expansion. But Ian Anderson says no further concessions are planned on the $7.4-billion project.

The Canadian Press

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