Energy East and Eastern Mainline applications withdrawn by TransCanada
TransCanada Corporation (ticker: TRP) said in a press release today that it will no longer be proceeding with its proposed Energy East Pipeline and Eastern Mainline projects.
TransCanada President and Chief Executive Officer Russ Girling put out a statement saying that TransCanada would inform the National Energy Board that it would no longer be proceeding with the Energy East and Eastern Mainline applications and that it would notify Quebec it is withdrawing the Energy East project from the environmental review process.
Energy East would have transported crude oil 2,850 miles from western Canada to eastern Canadian refineries and export markets.
Source: NEB
The Eastern Mainline was a proposed 173-mile pipeline and compression facilities to be added in the Eastern Triangle of the Canadian Mainline to meet the requirements of the existing shippers as well as new firm service requirements following the conversion of components of the Mainline to facilitate the Energy East pipeline.
Source: NEB
Girling said TransCanada would focus on its $24 billion near-term capital program “which is expected to generate growth in earnings and cash flow to support an expected annual dividend growth rate at the upper end of an eight to 10 per cent range through 2020.”
As a result of its decision not to proceed with the proposed projects, TransCanada is reviewing its approximate $1.3 billion carrying value, including allowance for funds used during construction (AFUDC) capitalized since inception and expects an estimated $1 billion after-tax non-cash charge will be recorded in the company’s fourth quarter results.
TransCanada stopped capitalizing AFUDC on the project effective August 23, 2017, as disclosed on September 7, 2017. In light of the project’s inability to reach a regulatory decision, no recoveries of costs from third parties are expected, the company said.
Calgary-based TransCanada runs a natural gas transmission network that extends 56,900 miles, tapping into virtually all major gas supply basins in North America. Its liquids pipeline system extends 2,700 miles, connecting growing continental oil supplies to markets and refineries.
