Pipeline Profiles: TransCanada Mainline

Sources: TransCanada PipeLines Limited, NEB

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The TransCanada Mainline was built in the mid-1950s to move natural gas produced in the Western Canada Sedimentary Basin to markets in eastern Canada and northeastern United States. The 14,100 km system extends from the Alberta-Saskatchewan border, across Saskatchewan, Manitoba and Ontario, and through a portion of Quebec. Historically, the Mainline transported gas produced in Western Canada. Since the mid-2000s some eastern segments of the Mainline reversed from export points to import points and began receiving gas produced in the Appalachian Basin.

In 2016, export capacity at Emerson I averaged 20.1 million cubic metres per day (0.71 billion cubic feet per day) and throughput averaged 9.06 million cubic metres per day (0.32 billion cubic feet per day). The average utilization of Emerson I in 2016 was 45.08%.

Flows measured at Emerson I are exports. The TransCanada Mainline connects to the Viking Gas Transmission Pipeline at the Canada/U.S. border near Emerson, Manitoba.

In 2016, export capacity at Emerson II averaged 83.38 million cubic metres per day (2.94 billion cubic feet per day) and throughput averaged 10.87 million cubic metres per day (0.38 billion cubic feet per day). The average export utilization of Emerson II in 2016 was 13.03%. In 2016, import capacity at Emerson II averaged 20.18 million cubic metres per day (0.71 billion cubic feet per day) and throughput averaged 0.71 million cubic metres per day (0.03 billion cubic feet per day). The average import utilization of Emerson II in 2016 was 3.53%.

Flows measured at Emerson II are both imports and exports. The TransCanada Mainline connects to the Great Lakes Gas Transmission Pipeline on the Canada/U.S. border near Emerson, Manitoba.

In 2016, export capacity at St Clair averaged 32.2 million cubic metres per day (1.14 billion cubic feet per day) and throughput averaged 2.9 million cubic metres per day (0.1 billion cubic feet per day). The average export utilization of St Clair in 2016 was 9.02%. In 2016, import capacity at St Clair averaged 61 million cubic metres per day (2.15 billion cubic feet per day) and throughput averaged 0.46 million cubic metres per day (0.02 billion cubic feet per day). The average import utilization of St Clair in 2016 was 0.76%.

Flows measured at the St Clair are imports and exports. The TransCanada Mainline connects with the Great Lakes Gas Transmission Pipeline at Canada/U.S. border near Sarnia, Ontario.

In 2016, export capacity at Chippawa averaged 19.76 million cubic metres per day (0.7 billion cubic feet per day) and throughput averaged 0 million cubic metres per day (0 billion cubic feet per day). The average export utilization of Chippawa in 2016 was 0.02%. Chippawa became an import point in 2015. In 2016, import capacity at Chippawa averaged 4.81 million cubic metres per day (0.17 billion cubic feet per day) and throughput averaged 4.26 million cubic metres per day (0.15 billion cubic feet per day). The average utilization of Chippawa in 2016 was 88.46%.

Flows measured at Chippawa are imports. The TransCanada Mainline connects with the Empire Pipeline at the Canada/U.S. border near Niagara Falls, Ontario. Prior to 2015, Chippawa was an export point.

In 2016, export capacity at Niagara averaged 27.38 million cubic metres per day (0.97 billion cubic feet per day) and throughput averaged 0 million cubic metres per day (0 billion cubic feet per day). The average utilization of Niagara in 2016 was 0%. Niagara became an import point in 2012. In 2016, import capacity at Niagara averaged 16.65 million cubic metres per day (0.59 billion cubic feet per day) and throughput averaged 17 million cubic metres per day (0.6 billion cubic feet per day). The average import utilization of Niagara in 2016 was 102.11%.

Flows measured at Niagara are imports. The TransCanada Mainline connects with the Tennessee Gas Pipeline and the National Fuel Gas Pipeline at the Canada/U.S. border near Niagara Falls, Ontario. Prior to 2012, Niagara was an export point.

In 2016, export capacity at Iroquois averaged 39.01 million cubic metres per day (1.38 billion cubic feet per day) and throughput averaged 13.87 million cubic metres per day (0.49 billion cubic feet per day). The average utilization of Iroquois in 2016 was 35.56%.

Flows measured at Iroquois are exports. The TransCanada Mainline connects with the Iroquois Gas Transmission System at the Canada/U.S. border near Iroquois, Ontario.

In 2016, export capacity at Other US Northeast averaged 8.66 million cubic metres per day (0.31 billion cubic feet per day) and throughput averaged 1.53 million cubic metres per day (0.05 billion cubic feet per day). The average utilization of Other US Northeast in 2016 was 17.67%.

Flows measured at Other US Northeast are exports. The TransCanada Mainline connects to three smaller U.S. pipelines in eastern Ontario – Cornwall, Napierville, and Phillipsburg. Other US Northeast flows is an aggregate of these three export points.

In 2016, capacity at Prairies averaged 180.7 million cubic metres per day (6.38 billion cubic feet per day) and throughput averaged 79.39 million cubic metres per day (2.8 billion cubic feet per day). The average utilization of Prairies in 2016 was 43.94%.

Flows measured at Prairies are intra-Canada. The NOVA Gas Transmission System (NGTL) delivers gas to the TransCanada Mainline at a point near Empress, Alberta.

In 2016, capacity at Northern Ontario Line averaged 97.08 million cubic metres per day (3.43 billion cubic feet per day) and throughput averaged 52.32 million cubic metres per day (1.85 billion cubic feet per day). The average utilization of Northern Ontario Line in 2016 was 53.89%.

Flows on the Northern Ontario Segment (NOL) are intra-Canada. The NOL segment begins at Compressor Station 41 and extends to Station 116 near North Bay, Ontario.

In 2016, capacity at Eastern Triangle – NOL Receipts averaged 93.94 million cubic metres per day (3.32 billion cubic feet per day) and throughput averaged 46.95 million cubic metres per day (1.66 billion cubic feet per day). The average utilization of Eastern Triangle - NOL Receipts in 2016 was 49.98%.

Flows measured at the Eastern Triangle – NOL Receipts are intra-Canada. Eastern Triangle – NOL Receipts includes receipts from the NOL segment. Receipts are measured at Station 116 in North Bay, Ontario.

In 2016, capacity at Eastern Triangle – Parkway Receipts averaged 65.56 million cubic metres per day (2.32 billion cubic feet per day) and throughput averaged 13.74 million cubic metres per day (0.49 billion cubic feet per day). The average utilization of Eastern Triangle – Parkway Receipts in 2016 was 20.95%.

Flows measured at the Eastern Triangle – Parkway Receipt are intra-Canada. Eastern Triangle – Parkway Receipts includes receipts from Parkway East, Parkway West and King’s North, all located near the greater Toronto area, Ontario.

The physical capacity of a pipeline is based on many factors such as the product(s) being carried, direction of flow, ambient temperature, pipeline compression, and maintenance work or other pressure restrictions. The operational capacity at each key point may also reflect contracts for transportation service, and supply and demand across the system. The actual physical capacity of the pipeline may be higher than the assumed operational capacity stated here.

Open data can be freely used, modified and shared by anyone for any purpose. The data for these graphs are available here.

Key Developments

Last updated: August 2016

TransCanada PipeLines Limited (TransCanada or TCPL) has been adding pipeline facilities in the Eastern Triangle to relieve constraints, enable more gas to flow into Ontario from the U.S., and meet growing demand.

TransCanada has two additional projects before the Board. Energy East proposes to convert 3 000 km of natural gas pipeline for crude oil transport, and construct 1 520 km of new pipeline. The Eastern Mainline application proposes to expand sections of the pipeline in Ontario so TransCanada can continue serving gas shippers if the Energy East Project goes ahead.

Regulatory Documents

Last updated: August 2016

Tolls

Last updated: August 2016

From 2007 to 2011, the TransCanada Mainline operated under a negotiated settlement based on a cost of service toll methodology. As average throughput declined and tolls increased, TransCanada and its shippers worked to find solutions. TransCanada filed a contested toll application (RH-003-2011), the outcome of which resulted in much lower multi-year fixed tolls. Since then, the Board has held several proceedings to address issues arising from the transition to this new regime.

TransCanada and three eastern local distribution companies (LDCs) returned to the Board at the end of 2013 with an application for a new toll regime incenting TransCanada to build new facilities in the Eastern Triangle. The Board approved this application in December 2014, resulting in somewhat higher tolls, a return to cost of service tolls, and other features. This toll methodology is expected to be in place until 2020 with a review period prior to 2018.

For several years, contracts on the TransCanada Mainline showed two distinct trends. First, long-haul contracts (from Empress across the Prairies and NOL) declined and short-haul contracts (in the Eastern Triangle) increased. Across the lower utilized Prairies and NOL sections, shippers were switching to interruptible or short-term firm contracts rather than using full-year firm service. When the RH-003-2011 Decision was implemented mid-2013, this pattern reversed and firm contracts increased dramatically.

Figure 1 shows the TransCanada Mainline benchmark toll (Empress to the Union Southwest Delivery Area) and the GDP deflator (normalized) for 2010-2015. Tolls increased in 2011 and 2012 due to a decrease in throughput and declining long-haul firm contract demand. The 2012 toll of $2.24/GJ remained in effect for the first half of 2013, while the RH-003-2011 proceeding was ongoing, and then declined to $1.65/GJ. The lower toll continued through 2014 until higher tolls were approved in 2015 to cover the cost of proposed new facilities.

Figure 1: TransCanada Mainline Benchmark Toll

Figure 1: TransCanada Mainline Benchmark Toll

Source: NEB

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This graph shows the TransCanada benchmark toll as a solid red line and the GDP deflator as a black dashed line. The benchmark toll increased from $1.64 in 2010 to a high of $2.24 in 2012. The toll decreased in 2013 and 2014 and increased up to $1.92 in 2015.

Financial

Last updated: August 2016

TCPL is a wholly owned subsidiary of TransCanada Corporation. In addition to the Canadian Mainline, TCPL has other business segments, including NGTL and Keystone. The Mainline’s revenue increased in 2014 and 2015 due to increased contracting and the ability to set higher tolls for non-firm services. TransCanada Corporation’s financial ratios continue to be stable and TCPL’s credit ratings are investment grade.

Table 1: TransCanada
TransCanada 2010 2011 2012 2013 2014 2015
Revenues (millions)Table Note a – TransCanada Mainline $1 818.3 $1 855.8 $1 558.6 $1 519.1 $1 645.4 $2 396.9
Net Income (millions)Note a – TransCanada Mainline $262.9 $246.7 $265.7 $273.4 $293.2 $200.7
Rate Base (millions)Table Note a – TransCanada Mainline $6 446.9 $6 165.3 $5 775.9 $5 751.9 $5 611.7 $4 617.2
Deemed Equity RatioTable Note a – TransCanada Mainline 40% 40% 40% 40% 40% 40%
Return on EquityTable Note a – TransCanada Mainline 10.2% 10% 11.5% 11.88% 13.06% 10.86%
Interest and Fixed Charges Coverage RatioTable Note b 2.01 2.39 2.18 2.39 2.59 2.7
Cash Flow to Total Debt and Equivalents RatioTable Note b 15.6% 16.4% 15.1% 15.5% 15.4% 14.7%
DBRS Credit RatingTable Note c A A A A (low) A (low) A (low)
S&P Credit RatingTable Note c A- A- A- A- A- A-
Moody’s Credit RatingTable Note c A3 A3 A3 A3 A3 A3

 

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