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Twentieth-Century Business Archives

Trans-Canada Pipe Lines Limited - Lehman Brothers Collection

Trans-Canada Pipe Lines Limited

List of Deals

TransCanada PipeLines Ltd. was incorporated in 1951 to undertake the construction of a natural gas pipeline across Canada. A trans-Canadian natural gas pipeline had been proposed as early as 1931, but it was the political and economic climate of the 1950s that led to the idea's fruition. Canada's population was booming during the 1950s, and energy shortages were becoming problematic. Canada discovered during World War II that it could not depend on the United States for energy, as the U.S. put its own energy needs first. While Canada's economic prosperity increased, so did U.S. ownership of most of Canada's wealth. Growing national sentiment called for railways and a trans-Canadian pipeline to be built completely within Canada, even if this was not necessarily the best route. On the U.S. side, the prospect of natural gas from Canada tempted some businessmen to invest in such a venture.

By 1954 both Canadian and U.S. interests had agreed on the usefulness of a pipeline through Canada that would also export gas to the United States. The U.S. participants, who had formed a company called TransCanada PipeLines, insisted that financing should be split evenly. The Canadian interest group, Western Pipe Lines Limited, opposed this 50-50 proposal because the United States had far greater financial resources at its disposal than did Canada. The Canadian group wanted the United States to take on 90 percent of the cost. In the end the Canadian investors agreed to the 50-50 split and sought to persuade their government to finance the pipeline.

In 1955 the newly formed TransCanada PipeLines needed to convince the Canadian government of its financial viability. The Royal Bank of Canada loaned the company Can$25.5 million, and a Montreal financier successfully negotiated large loans from the Canada Bank of Commerce was well as from the Royal Bank, thus enabling the company to win crucial government backing. The Canadian government finally approved the pipeline in June 1956.

Construction on the project began in 1957. The entire project was finished in October 1958, as originally scheduled. More than 2,200 miles long, it was the longest pipeline in the world, and was expanded almost continuously. In the 1960s the company developed a sophisticated computer system that could measure and control the flow of gas precisely, the first such system devised for pipelines. During that decade, the company diversified into the chemical industry, establishing the first of numerous gas-extraction plants in Empress, Alberta. In 1967 TransCanada PipeLines was permitted to extend its pipeline along the Great Lakes in the United States, an expansion that was completed in 1967. Between 1958 and 1968, operating revenue had shot up from Can$30 million to Can$200 million, and net income had risen from a deficit of Can$8.5 million to a surplus of Can$17.5 million.

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