(Calgary) TC Energy remains on track to complete the Coastal GasLink pipeline by the end of the year without further escalation in its construction costs, the Calgary-based company said Friday.
This update is welcome for TC Energy, which has come under intense scrutiny from investors and rating agencies due to its heavy debt load as well as skyrocketing costs for the Coastal Gas project. Link, a 670 km pipeline that will transport natural gas from northern British Columbia to LNG Canada’s facility in Kitimat.
The company’s rating was recently downgraded by DBRS Morningstar and Moody’s, in part due to the surging price of the project, which was hampered by unexpected construction issues and rising labor costs.
Over the course of the project, the construction of the pipeline also drew opposition and criticism from environmentalists and Indigenous leaders. While many Indigenous groups along the project route support the pipeline, Wet’suwet’en hereditary chiefs, whose territory the pipeline crosses, oppose it.
In February, TC Energy raised the estimated price of the project to $14.5 billion, up significantly from its previous estimate of $11.2 billion. This new price was also more than twice as high as its initial estimate, which was 6.2 billion.
At the time, the company still hoped to complete the pipeline by the end of 2023, but warned that if it took longer and construction was to extend to 2024, it could add $1.2 billion. additional to the cost of the project.
In the spring, the BC government ordered a handful of work stoppages on parts of the project due to sediment control and erosion issues.
But on Friday, TC Energy executive vice president Bevin Wirzba said Coastal GasLink is taking care of the difficulties and the project is more than 90% complete. He added that the company stands by its previously announced completion target and its most recent cost estimate.
“This project gave us a lot of really complex sections, the execution of which was risky, and I’m really proud that the team got them all done,” Wirzba said in a conference call with officials. analysts to discuss the company’s second quarter financial results.
“Executing the remaining portion is not risk-free, but we were able to meet these challenges week after week. […] Everything is in place so that we can deliver the project at the end of the year. »
Completing Coastal GasLink on schedule is a critical part of TC Energy’s overall strategic plan to reduce indebtedness and unlock growth opportunities.
On Thursday, the company announced plans to split into two separate companies by spinning off its crude oil pipeline business.
Having two separate companies — one focused on crude oil transportation and the other on natural gas and low-carbon forms of energy — will help TC Energy attract new investors and Pursue a broader range of growth opportunities,” said CEO François Poirier.
On Monday, TC Energy also announced that it would sell a 40% stake in its Columbia Gas Transmission and Columbia Gulf Transmission systems to New York-based Global Infrastructure Partners for $5.2 billion.
Poirier said he hoped to complete an additional $3 billion in divestments by the end of 2024, adding that the funds would be used to pay down debt and pave the way for growth for the two newly separated companies.
TC Energy posted a profit of 250 million for its second quarter, compared to that of 889 million realized during the same period a year earlier.
The company’s stock price fell 2.05%, or 4.3%, on Friday to close at $45.25 on the Toronto Stock Exchange.
