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Corporate Responsibility Report 2006

Business

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Our Performance

Investing in Strategic Infrastructure

Highlights From Our Pipeline Business

We are optimizing our pipeline network by connecting new supply, providing better access to markets, and introducing competitive and innovative approaches to meeting our customers’ needs.

  • We remain active in the advancement of the Mackenzie Valley Pipeline and Alaska Highway Pipeline projects to bring much-needed northern natural gas to market. We continue to work closely with the Mackenzie producers, explorers, the Aboriginal Pipeline Group, and the Northwest Territories and federal governments to move this project forward. In Alaska, it continues to be our objective to see a natural gas pipeline project develop within Alaska.
  • We have increased our ownership interests in strategically significant pipeline systems, such as Northern Border Pipeline Company, the largest natural gas pipeline serving the U.S. Midwest, and Tuscarora Gas Transmission, which serves northeastern California and northwestern Nevada. Through TC PipeLines, LP, we increased our interest in Northern Border to 50 per cent in February 2006. Also through TC PipeLines, LP, we increased our interest in Tuscarora to 99 per cent and began operating this pipeline in December 2006. Tuscarora is meeting the growing demands of the northern Nevada market.
  • We completed construction of the 130-kilometre (81-mile) Tamazunchale Pipeline in Mexico, which went into service in December 2006. We view Mexico as an integral component of the broader North American natural gas market, and anticipate future growth through the development of new natural gas pipelines and LNG terminals.
  • We’ve made significant progress on the Keystone Oil Pipeline project, a 3,456-kilometre (2,148-mile) pipeline that combines new build in the U.S., Alberta and Manitoba with the conversion of a portion of TransCanada’s existing pipeline facilities from natural gas to crude oil transmission. The Keystone Pipeline will have a nominal capacity of 590,000 barrels per day in late 2010. Keystone has contracts with shippers totalling 495,000 barrels per day with an average term of 18 years. This commercial support confirms our project is an innovative and cost-competitive way to link rising oil sands production to preferred markets in the U.S.
  • We continue to invest in our existing Canadian Mainline and Alberta pipeline systems in response to our customers’ needs to connect supply in Alberta and meet market demand throughout Canada.
  • We completed the acquisition of ANR Pipeline Company and ANR Storage Company and an additional interest in Great Lakes Gas Transmission in February 2007, which represents a unique opportunity to acquire regulated pipeline and storage assets that are a strong fit with our existing North American footprint. ANR is one of the largest interstate natural gas pipeline systems in the U.S., providing transportation, storage and various capacity related services to a variety of customers in both the U.S. and Canada. In a separate transaction, TC PipeLines, LP acquired the remaining interest in Great Lakes.

Highlights From Our Energy Business

  • Since 1999, TransCanada has built a diversified portfolio of low-cost, base-load power generation in selected markets where we enjoy a competitive advantage. We now own, or have interest in, approximately 7,700 megawatts, of power generation in Canada and the U.S.
  • In November 2006, TransCanada was awarded a 20-year Clean Energy Supply contract by the Ontario Power Authority (OPA) to build, own and operate a 683-megawatt (MW) natural gas-fired power plant near the town of Halton Hills, Ontario;
  • In September 2006 the 550-megawatt Bécancour plant – our largest cogeneration plant to date – was brought into commercial service;
  • Also in September 2006, the Portlands Energy Centre (PEC) signed an Accelerated Clean Energy Supply contract with the Ontario Power Authority for the 550-megawatt high-efficiency, combined cycle natural gas generation power plant. The plant is currently under construction in downtown Toronto;
  • TransCanada is positioned to become one of North America’s largest providers of wind energy through our 62 per cent interest in Cartier Wind Energy Inc. Cartier Wind was awarded six projects by Hydro-Québec Distribution representing a total of 740 megawatts. In November 2006, the first wind farm, Baie-des-Sables, went into commercial in-service and began delivering electricity under the 20-year power purchase agreement with Hydro-Québec Distribution; and
  • TransCanada, which already has existing natural gas storage capacity at two Alberta facilities, developed a new facility 35 kilometres (22 miles) north-west of Edson, Alberta. The facility, which is tied into our Alberta System, was commissioned on December 31, 2006. With more than 140 petajoules of storage capacity, TransCanada owns or leases approximately one-third of the natural gas storage capacity available in Alberta.
  • We continue to pursue the construction and operation of LNG terminals in Québec and New York State. In February 2006, Québec’s Ministry of Environment began its public consultation period, allowing the next phase for the proposed Cacouna Energy LNG terminal to begin. The Cacouna Energy project, a partnership between TransCanada and Petro-Canada, would be capable of receiving, storing, and regasifying imported LNG with an average send-out capacity of approximately 500 million cubic feet per day of natural gas. In December 2006, the Joint Commission of the Bureau d’audiences publiques sur l’environnement (BAPE) and the Canadian Environmental Assessment Agency (CEAA) report was made public. In January 2006, Broadwater Energy filed its formal application with the U.S. Federal Energy Regulatory Commission for approval to construct and operate the Broadwater LNG project in Long Island Sound. In November 2006, FERC issued a Draft Environmental Impact Statement for the project confirming Broadwater is needed and meets environmental standards. Subject to regulatory approvals, Broadwater plans to begin operation in early 2011 supplying one billion cubic feet of natural gas per day, an amount equal to the needs of four million New York and Connecticut residences. Broadwater is being developed jointly by TransCanada and Shell U.S. Gas & Power LLC.