The Daley Note: November 9, 2023
TC Energy’s (TRP) Gas Transmission Northwest (GTN) has received approval from federal regulators for the GTN Xpress project. The $75.1MM project will add 150 MMcf/d of capacity from Western Canada to the Pacific Northwest.
GTN Xpress will modify compressors to increase flows from Kingsgate, ID to Malin, OR, raising GTN pipeline capacity to 2.85 Bcf/d from 2.7 Bcf/d currently. TRP proposed the expansion in October 2021 with the goal of starting service by the start of the 2023 heating season, but protests from environmentalists contributed to a delayed decision at the Federal Energy Regulatory Commission (FERC). EDA estimates the project will start in 4Q24.
The project will add new import capacity from Alberta to meet growth on the West Coast. The region has been tight on gas supply in recent years. Gas prices jumped to over $40/MMBtu last winter when severe weather coincided with several pipeline outages. The harsh winter drained Pacific region storage inventory to historic lows by the end of 1Q23, supporting a regional price premium through the year.
GTN Xpress is backed by three anchor shippers (Cascade Natural Gas, Intermountain Gas, and Tourmaline Oil) with agreements that range from 30-33 years.
EDA’s Financial Blueprints estimate GTN Xpress will generate $14.2MM in annual EBITDA to TRP’s US Gas Pipelines segment. Moreover, GTN has proposed a new tariff structure that we believe would add to pipeline revenue.
In an ongoing Section 4 rate case, GTN would charge shippers $0.02/dth more to move gas from Kingsgate to Malin than the tariff used to estimate revenue in the GTN Xpress proposal. Should FERC accept the new rates, the project could generate $1.5MM more in annual revenue. The figure displays the anticipated step-up in contract revenue in the TRP Blueprint with a favorable FERC decision.
East Daley is monitoring projects like GTN Xpress through our West Coast Supply and Demand Forecast. Launching next month, this new report provides an in-depth view into supply, demand and flow dynamics affecting prices in the West. Reach out for more information on the West Coast Supply and Demand Forecast. – Zach Krause Tickers: TRP.
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