LNG

TC Energy, the North American natural gas pipelines operator with US and Mexican pipelines and the Coastal GasLink to supply Canadian LNG projects, is now counting the cost of the Biden Administration’s 2021 cancellation of the Keystone XL oil pipeline from Canada to the US Midwest.

Malaysian state energy company Petronas said the company was expanding its LNG fleet by three vessels to handle cargoes from the LNG Canada export project in British Colombia where Petronas is a shareholder.

TC Energy, the North American natural gas pipelines operator, reported record results with rising earnings from US and Mexican pipelines amid the completion of the Coastal GasLink to LNG Canada in the province of British Columbia.

The Canadian native American Haisla Nation of British Columbia and Pembina Pipeline Corp., who are partners in the development of Cedar LNG, have signed an accord with third parties to move forward with the venture proposed for the Douglas Channel.

Stonepeak, the New York-based investment firm specializing in energy infrastructure, has completed the acquisition of a 50 percent interest in the Key Access Pipeline System (KAPS), a Canadian natural gas liquids pipeline that will impact future feed-gas needs for LNG exports from Western Canada.

Pembina Pipeline Corp. and the Haisla First Nation from Kitimat in British Columbia have received environmental approvals to proceed with the near-shore Cedar LNG project on the Douglas Channel and have also signed a feed-gas tolling accord.

TC Energy Corp. reported a fall in quarterly net income, though revealed a long-awaited settlement with the Shell-led LNG Canada project of a dispute over a revised schedule for the Coastal GasLink pipeline because of disruptions caused by Covid-19 and other issues.

TC Energy also said in its earnings statement that the Coastal GasLink from the Montney Shale Basin in northeast British Columbia to the Pacific Coast for the LNG Canada project at Kitimat was now about 70 percent complete.

The company said second-quarter net income dropped to C$889 million (US$691M) compared with C$975M in the second quarter of 2021.

“Our revised agreements with LNG Canada establish a better framework for project advancement and further strengthen our long-term partnership,” said TC Energy.

“The agreements resolve uncertainty over specific and anticipated costs, mitigate project funding and execution risks and allow us to continue the safe and timely execution of the project,” it added.

While net income dropped, gross earnings from its pipeline businesses in the US, Canada and Mexico and power and storage units increased to C$2.37 billion from C$2.24Bln in the prior-year quarter.

“Through the first six months of 2022, we have delivered strong results reflecting the high utilization we continue to see across our entire system,” said TC Energy's President and Chief Executive François Poirier.

“Demand for clean, responsibly sourced natural gas remains high in North America, with energy security also driving incremental growth in the global LNG market,” added the CEO.

Back on track

“I am pleased to report we have reached a significant milestone with the Coastal GasLink Limited Partnership (Coastal GasLink LP), signing revised agreements with LNG Canada that will allow the safe and timely execution of our largest LNG-linked project,” explained Poirier.

“The 670-kilometre Coastal GasLink project is approximately 70 percent complete, with mechanical in-service expected by the end of 2023,” he stated.

The company said the Wilde Lake compressor facility near Chetwynd at the eastern end of the route was also nearing completion, representing one of the most significant pieces of infrastructure on the project.

Together with LNG Canada, the 2.1 Bcf per day pipeline will provide the first direct path for Western Canadian natural gas to reach global LNG markets in Asia and displace coal-fired power.

The Calgary, Alberta-based company stated that it also continued to deliver around a quarter of volumes destined for export from US LNG liquefaction plants through its US Natural Gas Pipelines and advanced 3.3 billion cubic feet per day of additional projects during the first six months of 2022.

Its US Natural Gas Pipelines flows averaged 25.4 Bcf per day, up over 3 percent, compared with the second quarter of 2021.

“By leveraging our competitive strengths, we continue to develop solutions to move, generate and store the energy North America relies on in a secure and increasingly sustainable way,” the CEO concluded.

The leader of the Haisla First Nation in British Columbia, Chief Councillor Crystal Smith, along with Pembina Pipeline Corp. Interim President and Chief Executive Scott Burrows and the Cedar LNG CEO Doug Arnell have spoken with optimism about the future development of the Cedar LNG project as it awarded an engineering contract.

Chief Councillor Smith and Pembina's Burrows said the 50-50 partnership’s joint venture had reached critical points in developing the floating LNG export plant near Kitimat in BC.

The FLNG project will be located in the Douglas Channel  and is expected have a liquefaction capacity of up to 4 million tonnes per annum of LNG.

Feed gas for Cedar FLNG will be sourced from the prolific Montney natural gas resource play in northeast BC.

Cedar LNG said it was pleased to announce an agreement with liquefaction technology firm Black & Veatch and South Korean shipbuilder Samsung Heavy Industries (SHI) for the front-end engineering and design (FEED) of the project's proposed floating liquefaction, storage and offloading units.

“Cedar LNG is rooted in meaningfully creating a low-carbon, Indigenous-led business that respects local values and protects the environment,” said Cedar's CEO Arnell.

“The project's low-carbon footprint, coupled with the use of Black & Veatch and Samsung's expertise and technology will result in a state-of-the-art facility the Haisla Nation, British Columbia and Canada can be proud of,” he stated.

FID in 2023

Cedar LNG expects to make a final investment decision in 2023 following completion of the environmental assessment process.

Subject to additional factors, including regulatory and other approvals, the expected in-service date for the project is 2027.

Both Smith and Burrows said their venture was strategically positioned to leverage Canada's abundant natural gas supply and “provide a critical, Indigenous-partnered solution” to support the global clean energy transition.

With recent advancements in the project's regulatory and engineering development, Smith outlined what it meant for the region.

“The Cedar LNG project will be the largest First Nation-owned infrastructure project in Canada, creating jobs, contracting and other economic opportunities for the Haisla Nation, the community of Kitimat, neighbouring Indigenous Nations, and the local region,” stated Smith.

“Cedar LNG represents long-term growth for our region in a way that protects our land and environment, and we are excited to see the project move forward in its environmental assessment process with innovative technology and reduced environmental footprint,” she explained.

Review phase

The application for an Environmental Assessment Certificate (EAC) was recently submitted to the British Columbia Environmental Assessment Office, moving the project into the 180-day application review phase.

This key landmark follows detailed engineering studies and engagement with Indigenous and local communities.

“The submission of our application for an EAC represents another significant step forward in exporting Canadian LNG to overseas markets, while supporting long-term prosperity for the Haisla Nation and the region,” explained Pembina’s Burrows.

“Each time we've returned to our design, whether to include community input or account for leading technology, we've made important improvements that have resulted in a superior project that respects the values of the local community and minimizes environmental effects,” declared the Pembina Interim CEO.

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.