Can Canada Become an Energy Export Powerhouse?

TransCanada’s new deal with Apache and Chevron could lead to an energy export boom to Asia.

| More on:
The Motley Fool
You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Earlier this week TransCanada (TSX: TRP)(NYSE: TRP) signed an important deal with Chevron (NYSE: CVX) and Apache (NYSE: APA) to build the $1.9 billion Merrick Mainline Pipeline Project. It’s an important project that will help link the emerging natural gas export market in British Columbia, which includes Chevron and Apache’s Kitimat LNG joint venture, with natural gas supplies from production basins to the east.

Why this project matters

The TransCanada pipeline will transport 1.9 billion cubic feet of natural gas per day that’s sourced through TransCanada’s own NOVA gas transmission system. It will take the gas from that source to Chevron and Apache’s proposed Pacific Trails Pipeline that will feed into the Kitimat LNG Terminal in British Columbia.

The project will ensure that gas can get from places like the Montney Shale, where TransCanada has proposed to build the North Montney Pipeline, to British Columbia to serve growing export capacity. Meanwhile, the Pacific Trails Pipeline from Chevron and Apache is also expected to be the final leg of the transport journey for gas that’s produced from places like the Liard and Horn River Basins, where Apache and Chevron have a large acreage position.

What needs to happen next

The decision to proceed with the Merrick Mainline Pipeline Project still doesn’t ensure that the Kitimat LNG facility will be built. That project must still receive final regulatory approval as well as a final investment decision from Chevron and Apache. This pipeline project also needs to be approved by the National Energy Board; that isn’t likely to come until at least next year as TransCanada doesn’t anticipate filing the necessary paperwork before the fourth quarter of this year.

However, this is still an important piece in getting Canada’s massive natural gas supplies from its gas-rich shale plays to the world export marketplace. If all goes according to plan, the Merrick Mainline project will begin flowing gas by the first quarter of 2020, with Chevron and Apache then sending it out to Kitimat.

What it means for investors

For investors, TransCanada is an interesting opportunity to invest in a potential Canadian energy export boom. The company has a project backlog that now totals $38 billion in commercially secured projects to be completed through the end of the decade. That’s an impressive amount of growth potential for the company, as it will enable TransCanada to profit as it becomes the major transporter of gas and oil from production basins to export facilities.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Matt DiLallo doesn’t own shares of any of the companies mentioned in this article.

More on Investing

Increasing yield
Dividend Stocks

TFSA Passive Income: 1 Top High-Yield TSX Dividend Stock to Buy Now

TFSA investors can now buy top Canadian dividend stocks at cheap prices and secure above-average yields for a portfolio focused…

Read more »

oil and natural gas
Energy Stocks

Better Buy: Suncor or Cenovus?

Suncor Energy Inc. (TSX:SU)(NYSE:SU) and Cenovus Energy Inc. (TSX:CVE)(NYSE:CVE) have soared in the year-over-year period.

Read more »

funds, money, nest egg
Dividend Stocks

TFSA Passive Income: 2 Great Canadian Dividend Stocks for Retirees to Buy Now

Retirees seeking reliable passive income can now buy top TSX dividend stocks at cheap prices.

Read more »

man window buildings
Stocks for Beginners

Foolish Beginners: 1 Stock Pick to Buy Now for a $6,000 TFSA

Brookfield Asset Management (TSX:BAM.A)(NYSE:BAM) stock looks cheap as shares regain their footing.

Read more »

data analyze research
Dividend Stocks

Earn Monthly Passive Income: 2 Hot Dividend Stocks in Canada to Buy Now and Hold Forever

These two hot dividend stocks could help you to earn stable monthly passive income in Canada.

Read more »

Human Hand Placing A Coin On Increasing Coin Stacks In Front Of House
Dividend Stocks

Be a Landlord: Top 2 REITs (With Monthly Dividends) I’d Buy and Forget

You can be a landlord and earn monthly dividends for the rest of your life. All you need is the…

Read more »

Target. Stand out from the crowd
Investing

3 Canadian Stocks to Buy That Beat Their Earnings Expectations This Week

If you're looking for top Canadian stocks to buy, here are three impressive companies that continue to perform well in…

Read more »

A stock price graph showing declines
Energy Stocks

2 Cheap Canadian Stocks That Likely Won’t Be on Sale For Much Longer

These two Canadian stocks are close to returning to all-time highs. Don’t miss your chance to take advantage of these…

Read more »