Columbia Pipeline Acquisition a Game Changer

Natural gas growth opportunities anticipated for years to come

As far as TransCanada executive Karl Johannson is concerned, TransCanada’s $13 billion acquisition of Columbia Pipeline Group — completed last week — is a game changer.

“The acquisition has solidified our position as one of the largest natural gas distribution companies and a strategically important player in the United States and across North America,” says Johannson, TransCanada president, natural gas pipelines.

That’s partly because TransCanada now has a leading position in North America’s two fastest growing natural gas basins; the Western Canadian Sedimentary Basin (WCSB) and — with the most recent acquisition — the Appalachia basin in the U.S. northeast.

The Marcellus and Utica basin, which lies beneath the Columbia pipeline system, and Montney/Duvernay, which lies beneath the NGTL system, have the lowest development and production costs and the highest growth prospects on the continent.

In the Columbia acquisition, TransCanada was presented with a rare opportunity to invest in a growing network of regulated pipeline and storage assets in these important shale gas regions.

“Adding Columbia Pipeline Group has given us a new platform for growth in the U.S. northeast,” explains Johannson.

The map showcases TransCanada’s North American natural gas pipelines, representing almost 91,000 kilometres (56,900 miles) of assets. The company transports more than 25 per cent of North Americans’ daily natural gas-fuelled energy requirements.

Access to North America’s premium markets

“Combined, we have a broad geographic footprint with access to North America’s premium markets and have become one of its largest players. and we believe this will lead to growth opportunities for many years to come.”

Consider that:

• TransCanada’s natural gas pipelines assets have grown by almost 40 per cent.
• The company now operates one of North America’s largest natural gas transmission businesses with almost 91,000 kilometres (56,900 miles) of natural gas pipelines – enough to circle the Earth twice.
• We transport more than 25 per cent of the natural gas that North Americans – in Canada, the U.S. and Mexico – rely on every day.
• TransCanada now can transport natural gas to both the west and east coasts of North America, the gulf coast and can even facilitate movements of northern produced natural gas into central Mexico.
• The company operates 4,400 storage wells – 25 per cent of the total operating wells across the continent, and far more than any other energy organization.

Combined $25 billion in near-term growth projects

With Columbia’s assets, TransCanada has also assumed control of an additional $7 billion of expansion projects, as interest from producers and Local Distribution Companies (LDC) for natural gas infrastructure reach record levels.

Combined, TransCanada is now advancing $25 billion in secured, near-term growth projects that will enter into service beginning this year.

The timing couldn’t be better, with the U.S. Energy Information Administration’s (IEA) assertions that cleaner-burning natural gas is on the growth track in America.

In a historical first, the IEA notes that natural gas will replace coal in 2016 as the dominant energy source for generating electricity in the United States.

And across North America, natural gas demand is forecast to grow from approximately 85 Bcf/d today to almost 125 Bcf/d by 2030.

Bringing together the best of both companies

The TransCanada-Columbia Pipelines union has brought the strength of both companies together in a way to best take advantage of those growth opportunities.

TransCanada has been in business more than 65 years while Columbia grew from humble beginnings in 1895 to the important role it plays today.

“We believe this deal is a fit, not just because of the strength of our combined businesses, but also because of the close alignment in the way we work,” explains Russ Girling, TransCanada president & CEO.

“We think about safety, being good stewards of the environment, and working together for a better future not just for ourselves but for the communities we work in, and for our countries.

“We provide energy to millions of people across North America and we do it better than anyone else.

“Together we are stronger, better able to compete, and in a unique position to grow and continue building critical energy infrastructure that North Americans need.”

Missing piece of puzzle

From Columbia’s perspective, TransCanada was the perfect fit for the pipeline’s growth aspirations.

“We finally found the missing piece of our puzzle,” said Stan Chapman, now TransCanada’s Senior Vice President & General Manager, U.S. Gas Pipelines. “We are now part of a family with a strong balance sheet that can move our assets forward.

“I truly believe we will put together a team that is the best-in-class in our industry – one that competes for and wins more than our share of growth projects.”

TransCanada “in the sweet spot . . . of natural gas”

Some media pundits tend to agree.

“With natural gas consumption expected to grow as it becomes the fuel of choice for U.S. power generation, it makes sense for TransCanada to stake its claim on the gathering, transportation and distribution segment of that market,” says columnist Deborah Yedlin, an energy reporter who contributes to the Calgary Herald and National Post.

“At its roots, TransCanada is a natural gas pipeline company.

“(The Columbia acquisition) creates one of North America’s largest, regulated natural gas transmission businesses, complementing its existing pipeline and storage assets,” Yedlin says.

“It also puts TransCanada in the sweet spot of North American natural gas production . . . ” she adds.

TransCanada now operates more mileage of pipelines in America than in Canada.

See a full list of TransCanada's pipelines based in America.