LNG

Sempra Infrastructure, the owner of the Cameron LNG plant in Louisiana and with other LNG interests in the US and Mexico, has named Tania Ortiz Mena has President of the company.

TC Energy Corp., the Canadian natural gas pipeline company, reported strong four-quarter results from US and Mexican activities, though posted a huge quarterly impairment charge related to the rising costs of the Coastal GasLink pipeline for LNG Canada and this meant a quarterly loss.

TC Energy, the North American natural gas pipelines and energy transportation group, reported a first-quarter profit compared with a loss in the prior-year period as it boosted LNG feed-gas provisions.

Naturgy Energy Group, the Spanish global utility company with LNG supplies from the US and Russia and natural gas and utility businesses in South America as well as renewables in the US and Australia, reported a more than 40 percent rise in annual net profits and an increase in gross earnings of over 7 percent.

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.

Petróleos Mexicanos (Pemex), the Mexican oil and gas company, is currently struggling to emerge from the economic slowdown amid widening losses and tumbling revenues at a time when several LNG export projects are moving forward in the country.

TC Energy Corp., one of the leading natural gas pipeline operators for LNG feed gas and exports to Mexico, is claiming over US$15 billion in damages under the legacy North American Free Trade Agreement (NAFTA) against the Biden Administration for cancelling the Keystone XL oil pipeline project.

TC Energy has filed a Notice of Intent to initiate a NAFTA claim under the United States-Mexico-Canada Agreement to recover economic damages resulting from the revocation of the Keystone XL project’s Presidential Permit first awarded by previous President Donald Trump.

“TC Energy will be seeking to recover more than US$15 billion in damages that it has suffered as a result of the US Government’s breach of its NAFTA obligations,” stated the Calgary, Alberta-based company.

TC Energy said that the Notice of Intent has been filed with the US Department of State’s legal office.

The company’s shares rose to C$61.64 (US$49.70) per share on the Toronto Stock Exchange after the damages claim was filed at the start of the weekend when the USA celebrates Independence Day on July 4.

The Canadian company was following up on a decision by the US to end the Keystone XL pipeline without warning and by presidential decree in January 2021 under the anti-hydrocarbon policies of the Biden Administration.

The 1,947km (1,210-mile) Keystone XL 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.

TC Energy’s priority project is now likely to be the Canadian Coastal GasLink pipeline to bring feed-gas from the prolific Montney Shale basin in northeast British Columbia to the town of Kitimat on the province’s Pacific Coast.

The pipeline will supply the LNG Canada joint venture led by Royal Dutch Shell and will have a second customer in the form of the Cedar LNG plant to be constructed by the local Haisla First Nation and Pembina Pipeline Corp. on Haisla traditional territory near the Douglas Channel.

Analysts note that TC Energy has made huge investments over the years that have enabled the provision of vital energy to the US, Canada and Mexico.

It partnered with IEnova, the Mexican infrastructure company of Sempra Energy, to construct the South Texas-Tuxpan Pipeline running almost entirely under the Gulf of Mexico for 800 kilometres (497 mile) to deliver clean-burning natural gas to homes and businesses in the southeast Mexican state of Veracruz.

The pipeline was completed in 2019 and has 2.6 billion cubic feet per day of capacity.

Its natural gas comes via the Valley Crossing Pipeline on the US side of the border.

Sempra Energy has sold a 20 percent interest in the new business platform, Sempra Infrastructure Partners, to global equity fund Kohlberg, Kravis, Roberts (KKR) for $3.37 billion in cash.

“This transaction values Sempra Infrastructure Partners at around $25.2 billion, including expected asset-related debt at closing of $8.37Bln,” said Sempra, developer of the Cameron LNG export plant in Louisiana on the Gulf Coast and the Costa Azul project in northern Mexico.

In a series of transactions outlined at the end of 2020 that are intended to simplify Sempra Energy's non-utility infrastructure investments under one self-funding platform, the San Diego-based company combined the strengths of Sempra LNG and Sempra’s Mexican arm, IEnova.

“Over the next decade, we expect the energy markets in North America to continue to grow and become increasingly integrated,” said Jeffrey W. Martin, Chairman and Chief Executive of Sempra Energy.

“Combining our resources with KKR improves our ability to capture new investment opportunities in cleaner forms of energy and the critical infrastructure that stores and transports it,” added Martin.

The CEO explained that the transaction also sent a clear signal about the value and expected growth of its infrastructure portfolio.

“Investing in critical new energy infrastructure creates jobs, delivers reliable energy with fewer emissions and supports North America's economic recovery," said Raj Agrawal, KKR Partner and Global Head of Infrastructure.

“That is why we are excited to partner with Sempra Energy. This infrastructure platform provides a strong foundation to expand cleaner energy resources across the continent,” added Agrawal.

“Backed by strong, contractually-supported, long-term cash flows, our investment is also consistent with KKR Infrastructure's strategy to seek stable and predictable returns for our investors,” he stated.

The transaction is expected to be completed by mid-2021, subject to customary closing conditions, including consents from certain third parties and regulators.

Infraestructura Energética Nova (IEnova), the Mexican subsidiary of Sempra Energy, said a positive final investment decision was taken to proceed with the transformation of the existing Costa Azul LNG import terminal into the first Mexican LNG export plant.

TC Energy Corp, one of the largest North American pipeline companies, said the Canadian federal government approved the expansion of the Nova Gas Transmission Ltd (NGTL) system moving the huge natural gas resources from the Western Canadian Sedimentary Basin to markets.