LNG

The Premier of the Canadian oil and gas province of Alberta said the provincial government aimed to invoke the sovereignty act to reject Federal clean energy regulations aimed at Alberta’s gas-fired power plants.

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.

Partners

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.

TC Energy Corp., the Canada-based North American pipeline company building the Coastal GasLink Pipeline from Dawson Creek to the Royal Dutch Shell-led LNG Canada project at Kitimat in British Columbia, has given a detailed update on work.

TC Energy’s summary of progress on the LNG feed-gas connection came as it reported second-quarter net income of C$1.3 billion (US$937 million) compared with C$1.1Bln (US$880M) in profits for the same period in 2019.

The company stated that it did not expect the Covid-19 pandemic to have any material negative impact on 2020 earnings or cash flows as most of its earnings come from long-term contracts.

For the six months to the end of June TC Energy reported net profits of C$2.4Bln versus C$2.1Bln in the first half of 2019.

The pipeline will be 670 kilometres (416 miles) in length, running from the Dawson Creek area of northeast BC to the Pacific coastal town of Kitimat where the liquefaction plant is being constructed.

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

TC Energy completed project financing after the sale of stakes to equity funds, allowing a full work programme to go ahead.

The transaction released proceeds of around C$2.1 billion (US$1.5Bln) for the Calgary-based operator from the sale to two equity funds, KKR-Keats Pipeline Investors II (Canada) Ltd. (KKR) and a subsidiary of Alberta Investment Management Corp. (AIMCo).

Shell and its four partners in LNG Canada, Mitsubishi Corp. of Japan, Malaysian energy company Petronas, Chinese major PetroChina and Korea Gas Corp., have already started construction of the liquefaction plant and affiliated facilities.

The plant is being built on a brownfield site near Kitimat that had been an energy products terminal before being acquired by Shell in 2011.

The Shell-led export project is working closely with the Haisla First Nation whose traditional lands are in the Kitimat coastal region as well as with other First Nations along the pipeline route.

TC Energy has said it remained committed to partnering with the 20 First Nations who have executed agreements with Coastal GasLink project.

The company has provided an opportunity for them to invest in the project with an option to acquire a 10 percent equity interest in Coastal GasLink.

“The introduction of partners, establishment of dedicated project-level financing facilities, recovery of cash payments through construction for carrying charges on costs incurred and remuneration for costs to date are expected to substantially satisfy our funding requirements through project completion,” explained TC Energy.

“We continue to work with the 20 First Nations that have executed agreements with Coastal GasLink to provide them an opportunity to invest in the project, with an option to acquire a 10 percent equity on similar terms to what has been agreed with KKR and AIMCo,” said the company.

TC Energy said that field activity continued to increase across the project following the spring thaw, with crews re-mobilizing while incorporating Covid-19 guidelines for construction safety.

“Ongoing work activity includes construction of roads, bridges, worker accommodation and right of way grading,” said TC Energy.

Pipe delivery continues with more than 50 percent of required pipe supply having arrived on site and mainline mechanical construction is now starting.

“The project is currently conducting a review of baseline cost and schedule to incorporate scope increases, permit delays and Covid-19 impacts,” added TC Energy.

The Calgary-based company had also announced that it would proceed to build the Keystone XL oil pipeline and commenced construction in April 2020.

“During the first half of 2020, our diversified portfolio of essential energy infrastructure continued to perform very well,” said Russ Girling, TC Energy’s President and Chief Executive.

”I am proud that in these unprecedented times we have continued to deliver the energy and advance projects vital to powering our industries and institutions as well as to the daily life and mobility of millions of North Americans,” added the CEO.

The company stated that despite the challenges brought about by Covid-19, TC Energy's assets “have been largely unimpacted”.

“With few exceptions, flows and utilization levels remain in line with historical and seasonal norms, underscoring their criticality to North American consumers, institutions and commerce,” stated the company.

TC Energy previously announced that it would proceed with construction of the Keystone XL oil pipeline, resulting in an expected additional investment of approximately US$8Bln.

This 1,947km (1210-mile) pipeline will be capable of safely delivering 830,000 barrels per day of crude oil from Hardisty in the Canadian province of Alberta, to the US state of Nebraska.

It will then connect with existing facilities to reach US Gulf Coast refiners to meet critical needs for transportation fuel and manufactured products. Keystone XL is expected to be placed into service in 2023.


The company said that as part of the funding plan, the Government of Alberta has agreed to invest around US$1.1Bln as equity in Keystone XL which substantially covers planned construction costs through the end of 2020.

Woodside Petroleum, the operator of the North West Shelf LNG plant in Western Australia, has emerges as the front-runner to acquire the 16.67 percent stake in the NWS facility to be sold by US major Chevron Corp. as part of its overhaul in the depressed market.

TC Energy Corp. has completed project financing and the sale of a 65 percent equity interest in the Coastal GasLink pipeline project to supply feed gas for LNG shipments to Asia from the Canadian province of British Columbia.

Pembina Pipeline Corp. of Canada said US regulators had approved its Jordan Cove LNG liquefaction and export plant at Coos Bay in the northwest state of Oregon as well its Pacific Connector Gas Pipeline project.

The Impact Assessment Agency of Canada (IAAC) has unveiled impact statement guidelines and a draft public participation plan for the Gazoduq pipeline project to unlock Western Canadian gas resources and supply an LNG export plant proposed for Québec.

GasNorth Energy of Canada has been granted permission from the British Columbia Oil and Gas Commission to proceed with construction of a small-scale natural gas liquefaction facility near Fort Nelson in the northeast of the Pacific Coast province.

US equity fund Kohlberg Kravis Roberts, now known as KKR, said it had purchased a stake in the Canadian pipeline that will transport shale-gas from northeast British Columbia to the proposed Royal Dutch Shell-led LNG Canada export project at Kitimat.

Cedar LNG in Canada,  a proposed floating export plant backed by the Haisla First Nation in the province of British Columbia, is the subject of a funding offer for citizens to take part in the Canadian federal government's impact assessment as the venture moves forward.