TransCanada's shale gas pipe cost jumps by $1 billion

HOUSTON (Bloomberg) -- TransCanada Corp. won a 49% price increase for space on the pipeline it’s building to haul shale gas from Appalachian fields as labor shortages and escalating land prices pushed construction costs almost $1 billion higher.

U.S. regulators approved the Calgary-based company’s request to charge gas explorers $14.663/dekatherm for space on its Mountaineer XPress Project, a 171-mi in West Virginia, according to a filing dated Aug. 24. That’s an increase from the $9.827 rate approved by the Federal Energy Regulatory Commission just eight months ago.

“The recent surge of pipeline construction activity in the Marcellus and Utica Shale regions caused costs associated with land acquisition and contractor services” to soar, TransCanada’s Columbia Gas unit said in the filing.

As output of the furnace and power-plant fuel has surged, pipe operators such as TransCanada, EQT Midstream Partners and Dominion Energy are vying to build conduits to carry the gas to urban markets.

The Appalachian region accounted for 29% of total U.S. gas production in July, according to the Energy Information Administration. Pipeline companies are in the process of adding 15 Bcf of new daily hauling capacity by the end of 2020, according to Bloomberg NEF analyst Anastacia Dialynas.