(Reuters) -Enbridge said on Tuesday it has reached a final investment decision to go ahead with Algonquin gas transmission (AGT) pipeline expansion to capitalize on the growing natural gas demand in the United States.

Even as oil production starts to plateau, gas production in the U.S. is predicted to increase to meet increased electricity use and a surge in liquefied natural gas exports.

U.S. pipeline firms, including Kinder Morgan, Williams and Energy Transfer, are spending billions to build hundreds of miles of new pipelines, including in the Northeast, to meet the increasing demand.

Once completed, the expanded pipeline will deliver about 75 million cubic feet per day of incremental natural gas under long-term contracts in the U.S. Northeast. Natural gas is a key component of the energy mix in the region.

Enbridge expects to invest $300 million in system upgrades and fully complete AGT enhancement in 2029.

Companies typically reach an FID on projects once they have secured enough supply deals to obtain the necessary financing for construction.

Last month, Enbridge, through its Matterhorn joint venture, reached FID for the construction of the Eiger Express Pipeline .