CALGARY -- The National Energy Board has approved construction of a natural gas pipeline originally intended to supply the Pacific NorthWest LNG export terminal near Port Edward, B.C., even though that $36-billion project was cancelled last July.

The NEB says it will grant an amendment to Nova Gas Transmission Ltd., a subsidiary of Calgary-based TransCanada Corp., to remove the requirement that its construction be preceded by a positive investment decision on the liquefied natural gas export terminal on B.C.'s coast.

The approval allows TransCanada to construct the majority of its North Montney Mainline project at a cost of about $1.4 billion, allowing it to bring gas from northern B.C. through 300 kilometres of pipeline to connect with existing pipe about 35 kilometres southwest of Fort St. John, B.C.

It has proposed beginning construction this year and bringing it into service, with the gas flowing east instead of west, over a two-year period.

In hearings, several producers and pipeline companies argued that the new pipeline shouldn't be approved because it will add natural gas to a western Canadian marketplace already swimming in it, further depressing prices at the marketing hub in Alberta.

Nova responded in an NEB filing that the need for the line is demonstrated by its 20-year contracts with 11 North Montney customers for a total of 1.485 billion cubic feet per day.

One of the clients is Progress Energy Canada Ltd., the exploration and production arm of Malaysia's Petronas Bhd., the main proponent of the Pacific NorthWest LNG project.

Petronas bought Progress Energy in 2012 and it has been one of the most active drillers in northeastern B.C. in recent years.

The NEB says the current Nova tolling method is not appropriate and directed provisional measures until a new methodology is developed and approved.