LNG

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 said it would exchange the publicly-held stake in its Mexican subsidiary and LNG plant developer IEnova for Sempra Energy shares and form a new North American infrastructure company grouping Cameron LNG in Louisiana, Costa Azul on Mexico’s Pacific Coast and the Port Arthur LNG project in Texas as well as other assets including natural gas pipelines.

Sempra currently owns 66.43 percent of IEnova, whose full name is Infraestructura Energética Nova, and is making a tender offer for the outstanding shares listed on the Mexican stock exchange, the Bolsa Mexicana de Valores (BMV) to be swapped for Sempra Energy shares.

The transaction for IEnova shares in Mexico is for the 29.83 percent, which were sold in an initial public offering in March 2013.

The IEnova IPO had been for 218 million shares which at the time raised the equivalent in pesos of $567 million.

The new Mexican share deal is necessary to clear the way for the pooling of Sempra’s LNG and natural gas and renewable assets into one company to be called Sempra Infrastructure Partners.

The San Diego, California-based company added that it would also sell a non-controlling interest in the Sempra Infrastructure Partners unit to help fund growth.

Sempra said it expected all transactions to be completed in the first quarter of 2021.

“The LNG portfolio consists of approximately 45 million tonnes per annum of LNG export capacity in development, construction or operation on the North American Pacific and Gulf Coasts,” said Sempra, in reference to Costa Azul, Cameron and the Port Arthur project.

With the IEnova shares of Mexican investors being exchanged for shares in Sempra, the US parent company Sempra Energy would be listed on the Mexican exchange in place of IEnova.

“We are excited about the announcement. In large measure, it is because we believe Sempra Infrastructure Partners is well positioned to be a leader in the global energy transition,” said Jeffrey W. Martin, Chairman and Chief Executive of Sempra Energy.

“By focusing on the critical need for new energy infrastructure right here in North America, both Sempra LNG and IEnova have created a significant pipeline of development projects that are expected to provide differentiated growth for decades to come,” added Martin.

“More importantly, this will provide an improved platform for innovation and potential new investments in renewables, hydrogen, energy storage and carbon sequestration," he added.

Martin said he was “especially excited” to be listing Sempra Energy shares on the BMV.

“Many of Mexico's most successful companies are listed there, and our plans to list our shares locally is a positive affirmation of our commitment to Mexico and desire to continue investing in the country and improving economic prosperity,” Martin explained.

“As part of Sempra Energy's family of companies, IEnova has delivered critical energy infrastructure to the country of Mexico for over two decades, supporting economic growth and the health and wellbeing of millions,” he stated.

In its stock-for-stock offer Sempra tendered for all the outstanding shares of IEnova at an exchange ratio of 0.0313 shares of Sempra Energy common stock for each ordinary share of IEnova.

Sempra Energy presented a non-binding offer to IEnova consisting of a fixed exchange ratio implying a price of 82 Mexican pesos ($4.10) per IEnova ordinary share, representing premiums of 11.6 percent and 22.6 percent over IEnova's 30-day and 90-day volume-weighted average stock prices.

To facilitate the exchange of the two sets of shares, Sempra Energy also filed a preliminary prospectus and exchange offer documents with the Mexican National Banking and Securities Commission and the BMV.

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.

Infraestructura Energética Nova (IEnova), the subsidiary in Mexico of Cameron LNG plant owner Sempra Energy and with plans for Mexican LNG production, reported a third-quarter increase in earnings.

TC Energy Corp., the leading North American pipeline company supplying natural gas to the US and Mexico and feed-gas for projects such as LNG Canada, has announced the retirement of President and Chief Executive Russ Girling.

The CEO will step down from his posts and the board of the Calgary, Alberta-based company at the end of December.

His replacement has been named as François Poirier, currently Chief Operating Officer and President of TC Energy’s Power & Storage and Mexican divisions.

Girling will assist Poirier with the transition through February 28, 2021.

One of TC Energy’s main current projects is building the Coastal GasLink Pipeline from Dawson Creek to the Royal Dutch Shell-led LNG Canada project at Kitimat in British Columbia.

Among its many other ventures in North America, the Canadian company is a shareholder in the South Texas-Tuxpan pipeline with Sempra Energy’s IEnova. The pipeline crosses part of the Gulf of Mexico from Texas and was built at a cost of $2.5 billion for US exports to Mexico.

“On behalf of all Board members, I would like to thank Russ for his invaluable contributions to the company,” said Siim Vanaselja, TC Energy's Board Chairman.

“Over the last decade, he has led TC Energy through a period of unprecedented growth and transformation, including the development of its Liquids pipelines footprint, expansion of its Mexican natural gas pipelines business, the successful US$13 billion acquisition of Columbia Pipeline Group and advancement of North American LNG,” stated the Board Chairman.

Vanaselja praised Girling for creating “a culture of excellence” focused first on the safety of employees and those in the communities where the company operates.

“It has been a privilege and honour to lead TC Energy over the past 10 years and to be part of the extraordinary TC team,” said Girling.

“With the wisdom and guidance of the Board and the skills and tenacity of our dedicated employees, we have accomplished many things, delivered the energy critical to millions of people safely and reliably every day, and created significant shareholder value,” stated Girling.

“I am grateful for the opportunity and confident in how the Company is positioned to prosper as global demand for energy continues to grow and transition in the years ahead,” Girling concluded.

Vanaselja said he was confident in the choice of François Poirier as Girling’s successor having seen his leadership over six years at TC Energy.

“He has had exposure to all aspects of our business and consistently shown unwavering commitment to the company’s long-term success. His integrity, strategic thinking, commercial acumen and bottom-line focus will serve the Company well in the years ahead,” stated the Chairman. 

Sempra Energy’s Mexican subsidiary IEnova said objections had been formally lodged against its Pacific Coast Costa Azul liquefied natural gas export plant in the nearby city of Ensenada.

Sempra plans to have two more North American export plants in addition to its existing Cameron LNG facility at Hackberry in Louisiana and these include a Texas project at Port Arthur and at Costa Azul in the Mexican state of Baja California.

Now IEnova has just announced that objections have been raised before the Office of Urban Management, Ecology and Environment of Ensenada’s city council.

IEnova said in a statement that the objections are against certain municipal permits granted in favor of the Costa Azul liquefaction project that is being developed on land adjacent to the existing LNG import terminal.

“IEnova considers that these claims are unfounded and inadmissible and will enforce their rights in the corresponding procedure, seeking to dismiss the claims of the plaintiffs,” said the company.

The objectors are two real estate companies named by IEnova as Inmuebles y Fraccionamientos Peninsulares SA and Inmobiliaria Aquino SA.

The Sempra subsidiary, whose official name is Infraestructura Energetica Nova SA , is overseeing the whole LNG project in addition to its growing Mexican business in the natural gas pipeline and energy and power sectors.

Under Sempra’s plan for the Costa Azul export plant, the facility will be constructed in two phases. 

The first part of the transformation of the plant will see the building of a single liquefaction Train to be located adjacent to the existing terminal and with capacity for 2.4 MTPA of exports.

The Mexican project has already signed three accords with French major Total and Japanese companies Mitsui & Co. and Tokyo Gas for the full export capacity of Phase 1 development at Costa Azul.

The Costa Azul venture has additionally received US authorizations for natural gas to be exported to Mexico and re-exported to Non-Free Trade Agreement countries. 

Costa Azul was the first LNG import terminal on North America's West Coast and was built in 2008. It is located 15 miles north of Ensenada and with bi-directional pipeline connections to the US.

The Costa Azul facility previously benefited from south-to-north flows on the North Baja pipeline. However, north-to-south flows on the West Coast now predominate.

Sempra’s IEnova unit continues to be a main natural gas pipeline developer in Mexico.

Among its assets are its stake in the South Texas-Tuxpan pipeline bringing US natural gas to the southern Gulf Coast side of the country.

This pipeline is seen as fundamental to maintaining a reliable gas service in the southeast of Mexico with 2.6 billion cubic feet per day of capacity.

The pipeline crosses part of the Gulf of Mexico from Texas and was built at a cost of $2.5 billion. It is owned by IEnova and Canadian pipeline company TC Energy.

The South Texas-Tuxpan pipeline is inter-connected to the Valley Crossing Pipeline in Texas completed by Enbridge Inc., another Canadian company like TC Energy and based in Calgary.

The 168-mile Valley Crossing pipeline runs from the Agua Dulce hub in Texas to the Gulf of Mexico east of the port of Brownsville. 

Infraestructura Energética Nova (IEnova), the Sempra Energy subsidiary in Mexico with plans for LNG production and whose assets include stakes in four major Mexican natural gas pipelines, has successfully completed an international offering to raise US$800 million, underpinning confidence in the North American gas sector.

Infraestructura Energetica Nova (IEnova), the Mexican subsidiary of Sempra Energy of the US, maintained earnings level because of the South Texas-Tuxpan natural gas pipeline as its Costa Azul LNG project was pushed back.

IEnova, the Sempra Energy Mexico-based subsidiary developing the Costa Azul LNG export plant on the Pacific Coast, boosted its first-quarter earnings with revenues from the South Texas-Tuxpan natural gas pipeline.

Sempra Energy said its Mexican subsidiary would move forward in 2020 with the Costa Azul liquefied natural gas export project in the northern Pacific Coast state of Baja California with permits already in place to re-export as LNG pipeline supplies imported from the US.

Sempra said a final investment decision to transform the existing Costa Azul import terminals into an export plant would come in the second quarter, pushed back from the first quarter, though all preparations were on track.

“The current economic environment may impact the schedule,” said Justin Bird, President of Sempra LNG. “However, the company remains confident in the long-term demand for LNG,” added Bird.

Sempra subsidiary IEnova, or Infraestructura Energetica Nova SA as it is officially known, is overseeing the project.

Costa Azul will have its liquefaction capability constructed in two phases. 

The first part of the transformation of the plant will see the building of a single liquefaction Train to be located adjacent to the existing terminal and with capacity for 2.4 MTPA of exports.

The Mexican project has already signed three accords with French major Total and Japanese companies Mitsui & Co. and Tokyo Gas for the full export capacity of Phase 1 development at Costa Azul.

The Costa Azul venture has additionally received US authorizations for natural gas to be exported to Mexico and re-exported to Non-Free Trade Agreement countries. 

Costa Azul was the first LNG import terminal on North America's West Coast and was built in 2008 about 15 miles north of Ensenada and with bi-directional pipeline connects to the US.

The Costa Azul facility previously benefited from south-to-north flows on the North Baja pipeline. However, north-to-south flows on the West Coast now predominate.

Sempra’s IEnova unit continues to be a main natural gas pipeline developer in Mexico.

Among the projects, IEnova’s South Texas-Tuxpan pipeline is a crucial outlet for US natural gas to the southern Gulf Coast side of the country.

This pipeline is seen as fundamental to maintaining a reliable gas service in the southeast of Mexico with 2.6 billion cubic feet per day of capacity.

The pipeline crosses part of the Gulf of Mexico from Texas and was built at a cost of $2.5 billion. It is owned by IEnova and Canadian pipeline company TC Energy.

The South Texas-Tuxpan pipeline is inter-connected to the Valley Crossing Pipeline in Texas completed by Enbridge Inc., another Canadian company like TC Energy and based in Calgary.

The 168-mile Valley Crossing pipeline runs from the Agua Dulce hub in Texas to the Gulf of Mexico east of the port of Brownsville.