LNG

TC Energy Corp., whose current ventures include the building of pipelines in the US, Mexico and Canada, said it had made “monumental progress” on the Coastal GasLink in British Columbia linking gas fields to the Shell-led LNG Canada venture and had achieved mechanical completion ahead of the year-end target.

The update came in its earnings as TC Energy reported a quarterly net loss of C$197 million (US$143M) versus a C$841M (US$612M) net profit in the same three months of 2022.

This was largely due to the after-tax impairment charge of C$1.18Bln (US$858M) for the three months to the ended of September 2023 related to TC Energy's equity investment in Coastal GasLink Pipeline partnership project company.

Calgary, Alberta-based TC Energy reported that net income for the nine months from January to September because of the impairment had dropped to C$1.36Bln from C$2.08Bln in the previous year.

“The team’s exceptional safety and construction execution on this challenging project means that we have reached 100 percent pipeline installation, including the successful hydrotesting of the full 670km (Coastal GasLink) pipeline length,” said François Poirier, TC Energy’s President and Chief Executive.

On track

“The project remains on track with the approximately C$14.5Bln cost estimate,” added Poirier.

TC Energy’s five divisions include Canadian Natural Gas Pipelines, US Natural Gas Pipeline, Mexican Natural gas Pipeline, Liquids Pipeline and Energy and Power Solutions.

“We are also delivering on our 2023 strategic priorities, including strengthening the balance sheet with the recent receipt of C$5.3Bln of asset sale proceeds that will be utilized for debt repayment and funding, along with maximizing the value of our assets with the announced intention to spin-off our Liquids Pipelines business,” the CEO explained.

At the start of October 2023 TC Energy completed the sale of 40 percent stakes for a total of C$5.3 billion (US$3.9Bln) in two US assets, Columbia Gas Transmission and Columbia Gulf Transmission, transporters of 20 percent of US LNG feed-gas volumes.

The Calgary, Alberta-based company confirmed that the Columbia Gas and Columbia Gulf stakes was completed to the buyer, the New York-headquartered asset management firm Global Infrastructure Partners (GIP).

US natural gas

The Canadian company described GIP as a “strong and reputable strategic and financial partner” that would help it unlock incremental value on the Columbia gas systems.

The Columbia Gas and Columbia Gulf pipelines span more than 15,000 miles across the North American natural gas network and are underpinned by strong long-term natural gas supplies and a rate-regulated commercial framework.

The company noted in its earnings highlights that quarterly US Gas Pipeline net profits rose to C$782M from C$714M and in the nine months to C$2.57Bln from C$1.73Bln because of US LNG feed-gas deliveries.

TC Energy said that US Natural Gas Pipelines LNG deliveries in the third quarter averaged 3.1 billion cubic feet per day, an increase from the third quarter of 2022.

The US Pipelines division also achieved a new record of deliveries to power generators of 5.2 Bcf on July 28, 2023.

TC Energy said that it delivered approximately 7 percent comparable gross earnings (EBITDA) growth of C$2.6Bln in the third quarter compared with $2.5Bn in the same three months of 2022.

Canada and Mexico

Nova Gas Transmission Ltd. (NGTL), TC Energy’s natural gas gathering and transportation system for the Western Canadian Sedimentary Basin connecting most of the natural gas production in western Canada to domestic and export markets, saw receipts average 14.0 Bcf per day, up 0.5 Bcf/d from the third quarter 2022.

NGTL System daily receipts reached 14.6 Bcf on August 6, 2023, the highest single day average on the pipeline.

TC Energy was also making progress together with Mexico’s Federal Electricity Commission (CFE) on the Southeast Gateway Project.

This consists of the construction of a marine pipeline that will transport natural gas, connecting the supply from Tuxpan, Veracruz, to delivery points in Coatzacoalcos, Veracruz and in Paraíso in Tabasco state.

“The Southeast Gateway Pipeline project continues to progress with its US$4.5Bln cost estimate and schedule,” said the company.

“Land rights and rights of way negotiations have closed and all critical permits for onshore construction have been received. We are advancing construction of onshore facilities and landfalls,” said the company.

“Offshore engineering is complete and offshore installation expected to commence prior to the end of 2023,” it added

In other Mexican projects, TC Energy placed the lateral section of the Villa de Reyes (VdR) pipeline into commercial service.

TC Energy also successfully completed two open seasons on Marketlink, supporting the sustained demand for Canadian crude on the Keystone Pipeline and Marketlink systems.

Iberdrola, the Spanish utility company and former major liquefied natural player that sold most of its LNG portfolio to Pavilion Energy of Singapore in 2019, said it had agreed to sell 13 mostly gas-fired power plants in Mexico for $6 billion to the Mexican government.

The Mexican President Andrés Manuel López Obrador praised the deal with Iberdrola as a “new nationalization” of the electricity market in Mexico.

The Chairman of Iberdrola, Ignacio Galán, and Mexico’s President López Obrador, announced the deal after a meeting.

Iberdrola said the sales agreement was signed with an entity called Mexico Infrastructure Partners and involved 8,400 megawatts of capacity from 12 gas-fired plants and one 103 MW wind asset called La Venta III.

Iberdrola Chairman Galán said the Spanish utility was still committed to advancing the development of renewable energy in Mexico.

Strategy

“Iberdrola confirms its commitment to Mexico by reaffirming its leadership as the leading private generator of renewable energy with the backing of the Federal Government to continue operating its assets under market conditions and drive the energy transition in the country,” Galán explained.

“In addition, Iberdrola Mexico will continue to serve its existing customers and both parties will work together to try to resolve the various disputes that have arisen in the country in recent years,” the Iberdrola Chairman added.

Leftist President López Obrador had previously compared the attitudes of Iberdrola and several other companies to those of conquerors, a reference to the Spanish Conquistadors who had invaded South America and Mexico in the 16th Century.

Iberdrola had been a major LNG market participant until the 2019 transaction with Pavilion Energy when Iberdrola’s LNG assets were sold as part of the Spanish utility’s €3.5Bln ($3.8Bln) “non-strategic asset rotation” plan.

Mexico itself is a major importer of US pipeline natural gas as well as LNG and also has plans to be an LNG exporter.

New policy

The Mexican President said that the sales agreements for the 13 power plants allowed progress to be made on the implementation of Mexico's “new energy policy” for the future.

The transaction with Iberdrola gives the Mexico’s state-owned power company, Comisión Federal de Electricidad (CFE), or the Federal Electricity Commission, majority control over the electricity market.

“This means we're rescuing the Comisión Federal de Electricidad and this is a new nationalization of our electric industry,” stated López Obrador.

López Obrador added that the acquisition would take CFE's power generation holdings to almost 56 percent of Mexico's total, up from about 40 percent.

A statement said that the deal was expected to be completed within the next five months. 

The Mexican Federal Electricity Commission (CFE) plans to renegotiate contracts with North American pipeline developers such as TransCanada Corp. and a subsidiary of US utility Sempra Energy as it attempts to downgrade pipeline natural gas and LNG and to use other fuels to meet increasing power demand.

Mexico is seeking more long-term natural gas supplies from the US Gulf Coast in competition to expected rising demand for feed-gas from large-scale LNG liquefaction and export projects under development, with the Mexicans issuing a request for offers for long-term supplies of natural gas at a West Texas hub.

Mexico, the largest US LNG and pipeline natural gas importer, will launch a contract system on July 1 for natural gas pipeline capacity reservations as part of its transition to a fully competitive market.

Sempra Energy of California and TransCanada Corp. have been awarded a US$2.1-billion contract to build, own and operate the pipeline from South Texas into Mexico where the US company has liquefied natural gas interests and ambitions.