WINNIPEG, Manitoba, March 14 (Reuters) - TC Energy ( TRP )

has agreed to sell its Prince Rupert natural gas

pipeline project to two partners in Ksi Lisims LNG, a proposed

Canadian export terminal, the North American pipeline operator

said on Thursday.

The pipeline project, which TC will sell to Ksi Lisims

co-developers Nisga'a Nation and Houston-based Western LNG, is

permitted to move up to 3.6 billion cubic feet of natural gas

per day across northern British Columbia (B.C.) to the Pacific

Coast near Prince Rupert, supplying Ksi Lisims' proposed

floating production and storage facilities.

The pipeline would run about 750-760 kilometres (466-472

miles) onshore and 30-50 km offshore.

Terms were not released. TC said the initial proceeds are

not material to the company, but the deal comes with potential

payments contingent on Ksi Lisims' final investment decision on

the pipeline and commercial operation.

TC is selling assets, most recently the Portland Natural Gas

Transmission System, to reduce debt.

The deal is expected to close in the second quarter.

Ksi Lisims' third co-developer, the Rockies LNG consortium

of gas producers, is not involved in the pipeline purchase.

Coastal B.C. is close to Canada's vast Montney shale field

and has a relatively short shipping distance to Asian markets.

The pipeline project is fully permitted and ready to build,

said Davis Thames, Western's CEO.

Ksi Lisims aims to be Canada's second-largest liquefied

natural gas export terminal after Shell-led LNG Canada,

which is scheduled to start commercial operations in mid-2025.

Ksi Lisims would ship 12 million metric tons annually.

Ksi Lisims requires environmental approval from the B.C. and

Canadian governments, with the decisions expected late this

year.

The LNG terminal would run on hydro-generated electricity to

become net-zero emissions by 2030 as required by the B.C.

government. That plan depends on utility BC Hydro expanding

transmission lines to northwest B.C.

Shell agreed in January to buy two million metric tons of

LNG annually from Ksi Lisims.