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CALGARY — TransCanada Corp. said it’s taking a serious look at converting its underused mainline, Canada’s largest natural gas pipeline, to oil service, a prospect that would give a big boost to the idea of a Canadian solution to anti-oil sands activism by shipping more of Canada’s Western oil to Eastern consumers.
CEO Russ Girling said Friday refiners in Eastern Canada and oil producers in Western Canada are keen on the concept and have asked TransCanada to look into the feasibility of converting parts of the system.
“We are going to actively pursue it and see if we can turn it into an opportunity for both, the oil and gas industry and TransCanada,” Mr. Girling told reporters after addressing the company’s annual meeting.
The giant pipeline is TransCanada’s original business and is one of Canada’s nation-building infrastructures. For decades, it is has moved natural gas from Empress, Alta., down to the U.S. northeast and into Ontario and Quebec.
But the pipeline is running at half capacity because of the discovery of big new shale gas deposits such as the giant Marcellus in the United States that are pushing new supplies into the pipeline’s historic market. The new supplies are so abundant they have depressed natural gas prices to decade-low levels, while pushing up transmission costs for producers and customers.
Disputes over who should pay for the underused, regulated infrastructure will land before the National Energy Board on June 4. A hearing into changing the structure of the system as well as tolls for 2012 and 2013 is expected to last until September.
If technically feasible, the conversion would be nation-building in new ways.
The pipeline could potentially carry between 300,000 barrels a day and 800,000 b/d, Mr. Girling estimated, making it a significant channel for growing oil sands production in Alberta that risks being stranded as a result of activists opposing new pipeline plans to the United States and to Canada’s West Coast.
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