The pipeline company holds a 28 per cent interest in TC PipeLines LP, which owns U.S. natural gas pipelines and related assets.
Financial terms of the proposed deal weren't disclosed Wednesday, but both sides said they expect a deal to close by the end of the first quarter of 2015.
Gas Transmission Northwest has a 2,178-kilometre pipeline that transports natural gas to Washington, Oregon and California.
TC Pipelines is the majority partner in the Gas Transmission Northwest system, or GTN, and holds interests in several other U.S. pipelines in partnership with TransCanada — which doesn't consider natural gas pipelines to be a core business.
TransCanada president and CEO Russ Girling said sales of its U.S. natural gas assets to the partnership will help fund the company's capital projects — primarily oil pipelines throughout the United States and Canada.
TC Pipelines welcomed the Calgary-based company's intention to shift its remaining natural gas pipeline assets in the United States to the partnership, subject to approvals from the partnership's board of directors and regulators.
TC Pipelines already owns the other 70 per cent of GTN. In total, TC Pipelines has interests in six federally regulated interstate natural gas pipelines.
TransCanada recently sold its remaining 30 per cent interest in the Bison Pipeline to TC Pipelines for US$215 million of cash. Bison is a 487-kilometre natural gas line connecting Rocky Mountain gas supplies to the Northern Border pipeline system.
Its management believes TC Pipelines has the capacity to complete more than US$1 billion of asset purchases a year, but didn't say how much the GTN assets would represent.
The company said Wednesday it ultimately plans to sell its remaining interests in four other pipeline systems to TC Pipelines.