North America pipeline company TC Energy continues dispute over Coastal GasLink pipeline to LNG Canada

Monday, 08 November 2021
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TC Energy, the leading North American pipeline company for oil and gas, said the Coastal GasLink pipeline for LNG Canada in British Columbia continued to increase significantly project costs and completion timetables compared with original schedules.

The costs and completion issues have arisen as a result of scope changes, previous permit delays compared to the original construction schedule and the impacts from Covid-19, including a BC provincial health order.

Coastal GasLink is in dispute with LNG Canada with respect to the recognition of certain costs and the impacts on project schedules.

“Coastal GasLink has sought and will continue to mitigate cost increases and schedule delays and expects incremental costs will be included in the final pipeline tolls, subject to certain conditions,” explained TC Energy.

Construction of the Royal Dutch Shell-led LNG Canada project is 50-percent complete after beginning three ago at the site in Kitimat, 640 kilometres north of Vancouver.

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Shell and its four partners, Mitsubishi Corp. of Japan, Malaysian energy company Petronas, Chinese major PetroChina and Korea Gas Corp., are investing C$40 billion (US$30.2Bln) to build the plant and associated facilities.

The initial two Trains will produce 14 million tonnes per annum of LNG. There is the possibility of expanding the facility to include up to four processing units in the future.

The engineering, procurement and construction contractors are JGC Corp of Japan and Fluor Corp. of the US.

TC Energy, based in Calgary, Alberta-based company reported on the Coastal GasLink pipeline as it also posted third-quarter net income of C$779 million (US$625), or C$0.80 per share, compared with net income of C$904 million, or C$0.96 per share, for the same period in 2020.

“During the first nine months of 2021, our diversified portfolio of essential energy infrastructure assets continued to perform very well and reliably meet North America's growing demand for energy,” said François Poirier, TC Energy’s President and Chief Executive.

“Comparable earnings of $3.21 per common share were 5 percent higher compared to the same period last year while comparable funds generated from operations totaled $5.3 billion,” added Poirier.

“Both amounts reflect the strong performance of our assets and the utility-like nature of our business together with contributions from projects that entered service in 2020 and 2021,” stated the CEO.

TC Energy said it was also in dispute over certain Mexican natural gas pipelines.

The issues concern the Tula and Villa de Reyes pipelines. The Mexican Comisión Federal de Electricidad (CFE) initiated arbitration in June 2019 for the Tula and Villa de Reyes projects, disputing fixed capacity payments due to “force majeure” events.

“Arbitration proceedings are currently suspended through December 31, 2021 while management advances settlement discussions with the CFE,” explained TC Energy.

On the cancelled Canada-US XL oil pipeline from Ontario to the US state of Nebraska, TC Energy has been paying higher interest expense primarily as a result of its cessation of Keystone following the revocation of the Presidential Permit in January 2021.

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