TC Energy of Canada sells gas-fired power plants to raise cash for LNG feed-gas pipelines

Wednesday, 31 July 2019
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TC Energy of Canada, one of the major natural gas pipelines owners and operators in North America, said it had agreed to sell its gas-fired power plants in the province of Ontario for around C$2.87 billion (US$2.18Bln) to raise cash for projects to deliver feed-gas to LNG plants under development.

TC Energy said it was selling two natural gas-fired power plants and a 50 percent stake in a third facility to Ontario Power Generation Inc.

The sale includes the 900-megawatt Napanee generating station, the 683-MW Halton Hills plant and half of the 550-MW Portlands Energy Centre in Toronto.

TC Energy said the it would be using the funds to pay for “near-term” capital projects.

These include the construction of the Coastal GasLink Pipeline, connecting gas production in the Montney shale basin of northeast British Columbia with the US$40Bln LNG Canada project, led by Royal Dutch Shell, in the town of Kitimat.

TC Energy is selling a total of C$6.3Bln of assets in 2019 and using the cash to fund its growth programme and “further strengthen its financial position.” The company had C$35.8Bln in long-term debt at the end of the first quarter.

“The sale of these facilities is part of our ongoing efforts to maximize value for our shareholders and fund our industry-leading secured growth program in a disciplined manner,” said Russ Girling, TC Energy President and Chief Executive.

“We continue to be a significant private sector power generator in Canada and are committed to the ongoing multi-billion-dollar life-extension program at the Bruce Power nuclear facility in Ontario,” he added.

“In addition, we remain interested in new low-risk investment opportunities in the electricity sector within our core North American markets,” stated Girling.

TC Energy agreed earlier in July to sell US shale basin midstream assets held by its subsidiary Columbia Midstream Group for US$1.27 billion to UGI Energy Services of the US.

TC Energy, which recently changed its name from TransCanada Corp., said the transaction was expected to close in the third quarter.

Columbia Midstream, which operates in the Appalachian Basin, owns four natural gas gathering systems and an interest in a company with gathering, processing and liquids assets.

However, TC Energy emphasized it would continue to own and operate its significant network of interstate pipelines in the Appalachia with its Columbia Gas Transmission system, which transports low-cost natural gas supplies from the shale production region to markets in the US, including LNG export facilities.

“Looking forward, we expect our strong operating and financial performance to continue as we are well positioned to fund our C$30Bln secured capital program, stated Girling.

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