LNG

TC Energy Corp., one of North America’s leading pipeline companies involved in multiple projects such as bringing feed-gas to the LNG Canada project and US gas supplies to Mexico, said it was disappointed with the expected action to revoke the existing Presidential permit for its Keystone XL pipeline.

TC Energy, based in Calgary in the Canadian province of Alberta, said the decision by the new US Administration would impact thousands of union jobs, new renewable energy investments and opportunities for Indigenous communities.

“The decision would overturn an unprecedented, comprehensive regulatory process that lasted more than a decade and repeatedly concluded the pipeline would transport much needed energy in an environmentally responsible way while enhancing North American energy security,” said TC Energy.

The initial permit award by the previous Administration to construct the Keystone oil pipeline resulted in an additional investment of around US$8Bln.

This 1,947km (1,210-mile) pipeline was designed to deliver 830,000 barrels per day of crude oil from Hardisty in the Canadian province of Alberta to the US state of Nebraska.

It would then have connected with existing facilities to reach US Gulf Coast refiners to meet critical needs for transportation fuel and manufactured products. Keystone XL had been expected to be placed into service in 2023.

As part of the funding plan, the provincial Canadian government of Alberta had agreed to invest around US$1.1Bln as equity in Keystone XL which substantially covered some construction costs.

TC Energy said the action by the Biden Administration on the Keystone XL would directly lead to the lay-off of thousands of workers and negatively impact ground-breaking industry commitments as well as “historic” equity partnerships with native North Americans.

It is the second Canadian-led multi-billion dollar project to be cancelled by the new US Administration following the reversal of a construction permit for the Jordan Cove LNG project in the northwest US state of Oregon being developed by Calgary-based Pembina Pipeline Corp.

TC Energy said it would review the US decision, assess its implications, and consider its options.

At the same time, TC Energy declared that the news from Washington DC was very disappointing and extended its regrets to the many, many thousands of people affected.

“TC Energy is thankful to its customers, American and Canadian workers, our partners the Government of Alberta and Natural Law Energy, labor organizations, industry, the Government of Canada and the countless supporters of this important energy infrastructure project,” the company declared.

TC Energy added that the revocation of the permit means that the advancement of the project is now officially suspended.

“The company will cease capitalizing costs, including interest during construction, effective January 20, 2021, being the date of the decision, and will evaluate the carrying value of its investment in the pipeline, net of project recoveries,” explained TC Energy.

Among its other projects, TC Energy is also building the Coastal GasLink Pipeline from Dawson Creek to the Royal Dutch Shell-led LNG Canada project at Kitimat in British Columbia.

That pipeline will be 670 kilometres (416 miles) in length and provide feed-gas for the liquefaction plant currently under constructed.

Once completed, the pipeline will connect abundant Western Canadian Sedimentary Basin natural gas supply to the Shell-operated liquefaction plant.

TC Energy informed investors that if there were no intervening actions on Keystone, this US action would result in a potentially large non-cash after-tax charge to earnings in the first quarter of 2021.

“Our base business continues to perform very well and, aside from Keystone XL, we are advancing $25 billion of secured capital projects along with a robust portfolio of other similarly high quality opportunities under development,” said François Poirier, TC Energy’s President and Chief Executive.

“These initiatives are expected to generate growth in earnings and cash flow per share and support annual dividend increases of 8 percent to 10 percent in 2021 and 5 percent to 7 percent thereafter,” added the CEO.