CALGARY, Alberta, Aug 6 (Reuters) - TransCanada Corp said on Tuesday it has signed an agreement with Malaysian-owned Progress Energy to transport two billion cubic feet per day of natural gas to underpin the $1.5 billion extension of its NGTL pipeline system in British Columbia.
The extension will also include an interconnection with TransCanada's planned Prince Rupert Gas Transmission project, which will supply natural gas to a proposed liquefied natural gas (LNG) export facility in Prince Rupert, BC.
Malaysia's Petronas acquired Progress Energy in a $4.9 billion deal last year. Petronas has applied to Canada's National Energy Board for a license to export nearly 20 million tonnes of LNG a year from the West Coast.
The 305 kilometre (189 mile) pipeline extension, called the North Montney Mainline, will reach the export delivery facilities in 2019, pending regulatory approvals.
The Aitken Creek section of the line is expected to be operational in the second quarter of 2016, while the Kahta section should be completed by the second quarter of 2017.
"The proposed North Montney Mainline project will provide substantial new capacity on the NGTL System in response to the rapidly increasing development of natural gas resources in northeastern British Columbia," said Karl Johannson, TransCanada's executive vice-president and president, natural gas pipelines.
Under commercial agreements with Progress Energy, volumes will ramp up between 2016 and 2019 to an aggregate volume of approximately 2.0 Bcf/d.
TransCanada plans to file an application with Canada's National Energy Board in the fourth quarter of 2013.