(Adds Canadian pipeline section still pending approval, paragraphs 6-7)

WASHINGTON, Sept 18 (Reuters) - The Federal Energy Regulatory Commission gave final U.S. approval on Wednesday to a joint pipeline project of Williams Cos WMB.N and Canada's BC Hydro to provide U.S. and Canadian natural gas to Vancouver Island.

The $159 million Georgia Straight Crossing pipeline would transport natural gas from the U.S.-Canada border at Sumas, Washington, to fuel electric generating facilitates on Vancouver Island in British Columbia. BC Hydro is the third-largest electric utility in Canada, supplying power to over 1.5 million customers, and is owned by the province of British Columbia.

Meeting the electricity requirements on Vancouver Island is a challenge for BC Hydro. The island is remote from mainland hydroelectric resources and the generation facilities operated by the company on the island only meet 20 percent of customers' needs. New generating facilities are planned and will need to be fueled by natural gas.

The project would consist of a combined 85 miles (138 kilometers) of pipeline from each of the U.S. and Canadian segments that would transport about 94 million cubic feet of natural gas per day under the Georgia Strait to Vancouver Island.

The pipeline could be in service by October 2004.

Williams said in a statement it was still awaiting approval from Canada's National Energy Board (NEB) for the Canadian portion of the pipeline.

Tulsa-based Williams said delays in setting a date for a public hearing on the project could cause added delays in building the Canadian portion of the pipeline.

Williams' gas pipeline unit is one of the nation's largest transporters of natural gas with a 29,300-mile pipeline network in the continental United States. The company is based in Houston.

(additional reporting by Spencer Swartz, San Francisco Power Desk + 1 415 677 2577)