TransCanada Overview

TransCanada Overview

At December 31, 2009, TransCanada had completed approximately $10 billion of its $22 billion capital program. Upon completion of this program, these assets are expected to generate additional annual earnings before interest, taxes, depreciation and amortization (EBITDA) of approximately $2.5 billion. The Company expects to complete most of the projects in its capital growth program by the end of 2013. Over the longer term, TransCanada intends to continue to develop its substantial asset portfolio and pursue other large-scale pipeline and energy infrastructure projects. TransCanada is committed to maintaining the financial strength required to invest in the development of North American energy infrastructure and respond to shifting energy supply-demand dynamics.

TransCanada's 2009 Key Accomplishments

  • Acquired ConocoPhillips' remaining interest in Keystone, increasing TransCanada's ownership to 100 per cent;
  • completed the first phase of construction of Keystone to Wood River and Patoka, Illinois;
  • entered into an arrangement with ExxonMobil to jointly develop the Alaska pipeline and, in January 2010, filed a plan to obtain approval to conduct the first natural gas pipeline open season to develop Alaska's vast natural gas resources;
  • Portlands Energy and the first phase of Kibby Wind were placed into service; and
  • issued approximately $6 billion of debt and equity during a challenging North American economic environment.

Pipelines Assets

The TransCanada pipeline network, including assets under construction and development, consists of more than 60,000 kilometres (km) (37,000 miles) of wholly owned and 8,800 km (5,468 miles) of partially owned natural gas pipelines and transports 20 per cent of the natural gas consumed in North America. TransCanada's natural gas pipelines link gas supplies from Western Canada, the United States (U.S.) mid-continent and Gulf of Mexico to premium North American markets. These assets are well positioned to connect emerging natural gas supplies, including northern gas, northeastern British Columbia (B.C.) and U.S. shale gas, Rocky Mountain gas and offshore liquefied natural gas (LNG) imports, to growing markets.

TransCanada's Alberta System gathered 66 per cent of the natural gas produced in Western Canada or 14 per cent of total North American production in 2009. TransCanada transports natural gas from the Western Canada Sedimentary Basin (WCSB) to Eastern Canada and the U.S. West, Midwest, and Northeast through three wholly owned pipeline systems: the Canadian Mainline, GTN and Foothills. TransCanada also transports natural gas from the WCSB to Eastern Canada and to the U.S. West, Midwest and Northeast through six partially owned natural gas pipeline systems: Great Lakes, Iroquois, Portland, TQM, Northern Border and Tuscarora. Certain of these pipeline systems are held through the Company's 38.2 per cent interest in TC PipeLines, LP (PipeLines LP).

ANR transports natural gas from producing fields located primarily in Texas, Oklahoma, the Gulf of Mexico and Louisiana to markets located in Wisconsin, Michigan, Illinois, Ohio and Indiana. It also connects with numerous other natural gas pipelines, providing customers with access to diverse sources of North American supply, including Western Canada and the Rocky Mountain region, and to a variety of end-user markets in the midwestern and northeastern U.S. ANR owns and operates 250 billion cubic feet (Bcf) of regulated natural gas storage capacity in Michigan. TransCanada also serves natural gas markets in Mexico through its Tamazunchale and North Baja pipelines, and will expand service to markets in Mexico with the Guadalajara pipeline which is under construction.

In addition, TransCanada is constructing the approximately 6,200 km (3,853 miles) Keystone crude oil pipeline. Keystone is expected to transport 1.1 million barrels per day (Bbl/d) of crude oil from Hardisty, Alberta to U.S. Midwest markets at Wood River and Patoka, Illinois, and to Cushing, Oklahoma, and to U.S. Gulf Coast markets. The pipeline will provide a low-cost shipping option to customers and is supported by long-term contracts with creditworthy counterparties. The first phase of Keystone, which is to Wood River and Patoka, is expected to commence delivery of crude oil in mid-2010 with the remaining phases expected to commence service in first quarter 2011 and first quarter 2013. In the medium to long term, opportunities for further additions to Keystone would expand the pipeline's transport capacity to 1.5 million Bbl/d from 1.1 million Bbl/d.

Energy Assets

TransCanada's Energy business has grown to more than 11,700 megawatts (MW) in 2009 from 754 MW in 1999, including assets under construction and development. The Company's diverse power generation portfolio of primarily low-cost, base load and long-term contracted facilities comprises a total of 20 plants in Alberta, Arizona, Eastern Canada, New England and New York City.

TransCanada's Western Power business comprises approximately 2,600 MW of power supply in Alberta and the western U.S. The Western Power portfolio in Alberta consists of three long-term power purchase arrangements (PPA): the Sheerness and Sundance A and B coal-fired plants, and five natural gas-fired cogeneration facilities consisting of MacKay River, Carseland, Bear Creek, Redwater and Cancarb. The Sundance A PPA expires in 2017 and the Sundance B and Sheerness PPAs expire in 2020. The other power facility in the Western Power portfolio is Coolidge, a natural gas-fired peaking facility under construction in Arizona whose output will be sold under a 20 year PPA. Coolidge is expected to be in service in second quarter 2011. Western Power's marketing business serves an integral function by purchasing and reselling electricity and natural gas to maximize the return from the Western Power assets.

The Eastern Power business is comprised of approximately 2,900 MW of power generation capacity, including facilities under construction. Eastern Power's operating assets consist of Bécancour, three of five Cartier Wind farms, Portlands Energy and Grandview. Power from Bécancour and Cartier Wind is sold to Hydro-Québec through 20 year power purchase contracts. Output from the Portlands Energy and Grandview facilities is sold through 20 year contracts with the Ontario Power Authority (OPA) and Irving Oil Limited (Irving), respectively. Halton Hills and the remaining two Cartier Wind farms which are under construction are expected to be in service in 2010, 2011 and 2012, respectively. Oakville, which is currently under development, is expected to be in service in first quarter 2014. Once operational, Oakville and Halton Hills will sell power to the OPA through 20 year contracts and the remaining two Cartier Wind farms will sell power to Hydro-Québec through 20 year contracts.

TransCanada has a 48.8 per cent interest in Bruce A and a 31.6 per cent interest in Bruce B, which together comprise the Bruce Power nuclear generating facility. Bruce A has four 750 MW reactors, two of which are being refurbished, and Bruce B has four operational reactors with a combined capacity of 3,200 MW. Through a contract with the OPA, all of the output from Bruce A is effectively sold at a fixed price and the output from Bruce B is subject to a floor price.

TransCanada's U.S. Power assets have approximately 3,800 MW of power generation capacity, including facilities under construction. The operating assets in the U.S. Power portfolio consist of Ravenswood, TC Hydro, OSP and phase one of Kibby Wind. Phase two of Kibby Wind is under construction and is expected to be placed into service in third quarter 2010. U.S. Power sells power to wholesale, commercial and industrial customers through TransCanada Power Marketing Ltd. (TCPM), a wholly owned subsidiary of TransCanada.

The accompanying graph illustrates each fuel source as a percentage of the Company's overall Energy portfolio:

Power by Fuel Source

TransCanada has developed a significant non-regulated natural gas storage business in Alberta where the Company owns or has rights to 129 Bcf or approximately one-third of natural gas storage capacity in the province.