Coastal GasLink pipeline sale gives TC the cash to build it

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TC Energy Corporation – the former TransCanada – has sold off a nearly two-thirds share of a controversial pipeline that will carry natural gas from northeast British Columbia to a contentious LNG export terminal in Kitimat

TC Energy announced it will sell 65 per cent of the Coastal GasLink Pipeline Project to private equity firm KKR and Alberta Investment Management Corporation (AIMCo).

The sales enables TC Energy to monetize the project. It said it expects the project to reach an agreement with a syndicate of banks to fund up to 80 per cent of the project during construction. Both transactions are expected to close in the first half of 2020, subject to regulatory approvals and the consent of LNG Canada, it stated.

Coastal GasLink involves the construction of 670 kilometres of pipeline and associated facilities. Once completed, the pipeline will have an initial capacity of 2.1 billion cubic feet per day and connect the western Canadian Sedimentary Basin natural gas supply from the Dawson Creek, B.C. area to the LNG Canada liquefaction and export facility being constructed in Kitimat, B.C.

TC Energy will hold a 35 per cent limited partnership equity interest in Coastal GasLink and will build and operate the pipeline, under contract with the limited partnership.

Russ Girling
Russ Girling

“The partial monetization of Coastal GasLink advances our ongoing efforts to prudently fund our $30 billion secured capital program while maximizing value for our shareholders,” Russ Girling, TC Energy President and Chief Executive Officer, stated in a news release. “We look forward to establishing a long-term relationship with KKR and AIMCo as we advance this critical energy infrastructure project. We remain fully committed to the Project and will continue to construct, deliver and operate the pipeline on behalf of the partnership.”

TC Energy said it expects to gain about $600 million after taxes through the sale, and well as a required revaluation of residual ownership interest to fair market value and recognition of previously unrecorded tax benefits.

Ben Hawkins, Senior Vice President, Infrastructure & Renewable Resources at AIMCo, said in a statement: “We look forward to working with the management of TC Energy, a recognized leader in the responsible development and reliable operation of energy infrastructure, to achieve the full potential of this project.”

LNG Canada is a joint venture of Shell, North Montney LNG, Diamond, PetroChina, and Kogas. Together, they proposed to build a LNG export terminal in Kitimat and a pipeline from Groundbirch, B.C., to the terminal. TCPL, a subsidiary of the then-TransCanada Corporation, won the bid to build the CGL Pipeline.

The project has divided Indigenous communities. In February, Wet’suwet’en hereditary leadership called for a stop work order from the province. Twenty First Nation band councils along the route, however, have signed agreements with Coastal GasLink. Some have been outspoken in their support for the project.

© Calgary’s Business

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