TransCanada announced Wednesday it plans to build a Can$5 billion (US$5.06 billion) natural gas pipeline from the North Montney gas-producing region in Western Canada to a Pacific Coast port.
TransCanada said in a statement it had been selected by Malaysia-controlled Progress Energy to design, build, own and operate the pipeline to carry gas to a new liquefied natural gas terminal being built near Prince Rupert, British Columbia.
Progress Energy, which was recently bought by Malaysia's national oil company Petronas, is both developing the North Motney shale gas fields and building the LNG terminal.
In an email, a TransCanada spokesman told AFP funding for the project will come from "multiple sources," and construction costs would eventually be recouped through tolls.
The pipeline, which must still receive regulatory approval, is to be TransCanada's second major pipeline connecting Canadian gas fields to Pacific ports for shipping to markets in Asia and elsewhere.
TransCanada is also proposing extending a pipeline in northeast British Columbia to connect the Western Canada Sedimentary Basin gas supplies to the Prince Rupert hub, at a cost of up to Can$1.5 billion.
TransCanada currently owns and operates 24,000 kilometers (15,000 miles) of natural gas pipelines in Western Canada. These new projects would add more than 1,400 kilometers to the company's natural gas transmission systems in the region.
The announcement comes as several companies in Canada are scrambling to build an expansive new pipeline network to feed new markets including Asia, as Canada's current sole customer, the United States, hikes its own production of oil and gas and cuts imports from its northern neighbor.
Canada holds the third-largest oil reserves in the world but 98 percent of its oil exports and 100 percent of its natural gas shipments go the United States.
In December, Canada's Natural Resources Minister Joe Oliver urged the country to build more pipelines to move oil from landlocked Alberta province to both refineries in eastern Canada and the Pacific coast to fill tankers bound for Asia.
Proposed pipeline projects, however, have faced stiff opposition from environmental activists in both Canada and the United States, as well as from some aboriginal tribes and land owners in their path.
And regulatory approvals have sometimes been difficult to obtain.
US President Barack Obama last year denied approval for a $7 billion TransCanada pipeline connecting Alberta's oil fields to refineries and ports in the US Gulf Coast, and the US State Department asked for a new route to avoid environmentally sensitive areas.
The department is currently reviewing the company's revised application for a permit to proceed with a 1,179-mile leg of the Keystone XL pipeline from Hardisty, Alberta to Steele City, Nebraska and is expected to announce a decision early this year.