A little over two weeks ago, a new pipeline began quietly moving natural gas under an eight-kilometre (five-mile) stretch of rural West Virginia. Known as Utica Access, the 24-inch-wide pipeline transports enough clean-burning natural gas to meet the needs of more than 700,000 typical households every day. It is a small piece of North America’s natural gas transmission network, but it provides an important link for moving the growing volumes of gas produced in the Utica Shale formation of the northeastern United States to market. It is also the most recent example of how TransCanada continues to deliver the energy millions of people rely on to go about their daily lives.
Significant growth generated from operations
Our success in providing safe and reliable operations while moving ahead with an ambitious growth plan was also highlighted by the release of our financial results for the third quarter of 2016. Despite reporting a net loss for the quarter, we achieved significant growth in comparable earnings and comparable funds generated from operations, thanks in large part to our acquisition of Columbia Pipeline Group earlier this year, which included the Utica Access project.
“Our strong financial results reflect the acquisition of Columbia and continued strong performance from our large portfolio of high-quality energy infrastructure assets,” said President and CEO Russ Girling.
Girling said the merger of the two companies has gone well since the acquisition took place on July 1. An agreement to sell our power generation business in the northeast U.S. – a key piece in financing the Columbia acquisition – was announced along with other steps the company is taking to strengthen our financial position over the long term and grow our dividend eight to 10 per cent annually through the rest of the decade.
“Columbia complements our overall strategy of owning and developing highly contracted and regulated assets that generate stable and predictable earnings and cash flow,” Girling said. “Following the sale of our merchant U.S. Northeast power business, the proportion of TransCanada’s earnings before interest, taxes, depreciation and amortization (or EBITDA) expected to come from these assets will exceed 95 per cent.”
Over $25 billion in near-term capital projects
Looking forward, we remain focused on advancing more than $25 billion in near-term capital projects that are underway across Canada, the U.S. and Mexico for completion over the next four years. Bringing these facilities to life on time and on budget will provide the incremental growth in cash flow and earnings that will enable us to deliver on these commitments to our shareholders.
In addition to Utica Access, several other projects continued to move forward since the end of June, including:
- The Keystone Pipeline System began delivering crude oil produced in Canada and the U.S. to even more refinery markets on the U.S. Gulf Coast, with the completion of the Houston Lateral pipeline and tank terminal in August.
- Construction is complete on the Mazatlan pipeline project in Mexico and the pipeline is awaiting natural gas to begin service under contract with Mexico’s state energy company. TransCanada now has more than $5 billion of investment in Mexico, including existing natural gas pipelines and several new projects under development.
- The Government of Canada approved a $1.3-billion expansion program on the NGTL system in Alberta and northeastern B.C. – projects that are expected to provide more than $1 billion in economic benefits and job opportunities for local communities.
- The $1.4-billion Leach XPress natural gas pipeline project in Ohio and West Virginia received a final environmental impact statement from the Federal Energy Regulatory Commission. The project is expected to create more than 5,000 jobs when construction begins later this year.
At the same time, we continue to look for ways to maximize the value of our existing assets. In the United States, we reached a settlement that will see rates on the ANR Pipeline increase almost 35 per cent, including a three-year program to undertake important upgrades and maintenance to enhance the efficiency, reliability and safety of the system for the long term.
And in Canada, we recently launched an open season on the Canadian Mainline that will provide competitive tolls for gas producers in Western Canada to access markets in eastern Canada and the northeast United States.
“Through a focus on safe operations and disciplined execution of our plans, including the Columbia integration, I’m confident we will achieve our vision of being the leading energy infrastructure company in North America while continuing to generate superior risk adjusted returns for our shareholders,” Girling said.
*This blog contains information that is forward-looking and is subject to important risks and uncertainties. All forward-looking statements reflect TransCanada’s beliefs and assumptions based on information available at the time the statements were made and as such are not guarantees of future performance. Readers are cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed. TransCanada undertakes no obligation to update or revise any forward-looking information except as required by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from the anticipated results, refer to TransCanada’s Third Quarter Report to Shareholders dated November 1, 2016 and 2015 Annual Report on our website at www.transcanada.com or filed under TransCanada’s profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission at www.sec.gov.