TransAlta Sees Power Generation Growth With Canada LNG Exports

TransAlta Corp. (TA), Canada’s largest publicly-traded power generator, expects development of liquefied natural gas exports from Canada to provide opportunities for expanding electricity production in western Canada.

LNG plants, which cool gas to a liquid, may need as much as 2,000 megawatts of new generating capacity to serve them in locations such as Kitimat and Prince Rupert, in northern British Columbia, Chief Executive Officer Dawn Farrell said in an interview yesterday. The Calgary-based company is already talking with backers of proposed LNG projects, such as Apache Corp. and Royal Dutch Shell Plc.

“LNG could be very big,” she said. “They need cheap power. It’s not to serve Canadians - we have enough. It’s to serve our trading partners.”

TransAlta has focused on supplying commodity exporters in western Canada and Australia with power for extracting and processing resources such as oil and gas. British Columbia Hydro & Power Authority, the provincially owned utility, and the government have to determine how power will be supplied to the Canadian LNG industry, said Farrell.

Producers in Canada, whose largest market is the U.S., are seeking new buyers as North American output climbs and gas prices trade near 10-year lows. About 62 percent of Canadian gas was exported to the U.S. in 2010, according to the Canadian Association of Petroleum Producers, an industry group.

Asian Demand

Chinese consumption of the fuel has increased an average of about 16 percent annually from 2000 to 2010 and will continue expanding as much as 12 percent a year through 2020, according to Bloomberg New Energy Finance estimates. Japan is looking to import more gas after idling its nuclear power plants following the March 2011 earthquake and meltdown at the Fukushima Dai-Ichi reactors.

Shell, Houston-based Apache, the U.K.’s BG Group Plc and Haisla Nation, an aboriginal group centered in Kitimat, British Columbia, the coastal base for many of the proposed LNG terminals, are behind as many as seven proposed projects for Canada’s Pacific coast.

TransAlta will continue to make acquisitions, using debt if necessary, to continue expanding its business, she said. Acquisitions, probably gas plants or wind farms, may cost the company between C$300 million ($307 million) and C$500 million annually, Farrell said.

California also is an “interesting” market for TransAlta, with opportunities to buy wind or gas projects, Farrell said. The company already operates a geothermal plant in the U.S.’s largest state.

To contact the reporters on this story: Jeremy van Loon in Calgary at jvanloon@bloomberg.net

To contact the editors responsible for this story: Susan Warren at susanwarren@bloomberg.net; David Scanlan at dscanlan@bloomberg.net

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