CALGARY, Alberta, Oct 30 (Reuters) - TransCanada Corp said on Thursday it is planning a new, C$1.5 billion ($1.34 billion) natural gas pipeline serving southern Ontario and Quebec, as it converts other lines to oil service as part of its massive Energy East pipeline project.
Canada's second largest pipeline operator said its 250-kilometer (155-mile) Eastern Mainline Pipeline project will have a capacity of 600 million cubic feet per day and ensure natural gas can reach growing markets in Canada's two most populous provinces.
The new line may help assuage concerns that converting part of TransCanada's under-utilized cross-country mainline natural gas system would limit supplies to the region in the winter, when demand is highest.
"Ontario and Quebec gas customers will continue to receive their gas to heat their homes as we (TransCanada) have done for the last 60 years," TransCanada Chief Executive Officer Russ Girling said in a news conference.
The company has filed for regulatory approval for the gas pipeline project along with its application for the C$12 billion Energy East project, which will carry Western Canadian crude to refineries in Quebec and New Brunswick as well as supplying two tanker ports for shipments to the United States, Europe and other markets.
Girling said TransCanada and its shippers on Energy East will fund C$500 million of the gas-pipeline's cost, while the conversion of part of the company's existing gas network, valued at C$1 billion, will save Ontario and Quebec gas customers C$900 million over the next 15 years.
"The Energy East project and the Eastern Mainline project ... will not increase the cost of gas-transmission service to Ontario and Quebec," Girling added.
TransCanada expects to begin construction of the new line in 2016. (1 US dollar = 1.1189 Canadian dollar) (Reporting by Scott Haggett; Editing by Paul Simao)