TC Energy provides Coastal GasLink Project update
February 01 2023 - 6:30AM
News Release – TC Energy Corporation (TSX, NYSE: TRP) (TC Energy or
the Company) today announced updated cost estimates for the Coastal
GasLink Project (the Project). The Project continues to face
material cost pressures that include challenging conditions in the
Western Canadian labour market; shortages of skilled labour;
impacts of contractor underperformance and disputes; as well as
other unexpected events like drought conditions and erosion and
sediment control challenges.
A comprehensive cost and schedule risk analysis (CSRA) was
conducted to assess current market conditions and potential risks
and uncertainties facing the remaining project scope. As a result
of the CSRA, TC Energy’s estimate of the costs to complete the
Project has increased to approximately $14.5 billion. This estimate
excludes potential cost recoveries and incorporates contingencies
for certain factors that may be outside of the Company’s control
such as labour conditions; contractor performance; and
weather-related events.
TC Energy expects to fund the incremental revised project costs
and is actively pursuing cost mitigants and recoveries that may
partially offset a portion of these costs, some of which may not be
conclusively determined until after the Project is in service.
Coastal GasLink is working closely with its prime contractors on
implementing productivity improvement strategies targeting
mechanical completion by year-end 2023, with commissioning and
clean-up work continuing into 2024 and 2025. The CSRA review also
considered the potential impact of an extension of construction
well into 2024. In that event, costs would increase further by up
to $1.2 billion. Due to the increase in the expected cost of the
Project and the additional funding required, TC Energy will
recognize an impairment to its equity investment in Coastal GasLink
LP in its fourth quarter 2022 financial results.
The Coastal GasLink Project continues to make significant
progress having reached approximately 83 per cent overall
completion. The entire route has been cleared, grading is more than
94 per cent complete and over 485 km of the approximately 670 km
pipeline has been backfilled with restoration activities underway
in many areas. The Wilde Lake Compressor Facility has commenced
commissioning work with the introduction of natural gas expected in
March, representing another significant milestone in reaching our
targeted mechanical completion later this year. Once complete,
Coastal GasLink will be Canada’s first direct link for LNG
deliveries that will further support displacing 60 to 90 million
tonnes of CO2 emissions annually, an important step along the
energy transition.
TC Energy’s overall 2023 capital expenditure outlook has been
revised to approximately $11.5 to $12.0 billion, reflecting the
deferral of certain project spending, expected cost-saving
initiatives and incremental funding requirements associated with
Coastal GasLink.
“We are disappointed with the increase in the Coastal GasLink
Project costs. We continue to be laser-focused on safely completing
this critical piece of energy infrastructure at the lowest possible
cost, which will enable Canada’s first direct path for LNG
exports,” said TC Energy President and CEO François Poirier. “The
Project will provide substantive benefits for Indigenous and local
communities across the Project route, our customers, the Western
Canadian Sedimentary Basin, as well as playing a vital role in
enabling global energy security and emissions reduction
contributing to global climate goals,” added Poirier.
The Company’s resilient portfolio of high-quality, utility-like
assets continues to deliver consistent and sustainable cash flow
growth. We remain committed to growing our dividend at an annual
rate of three to five per cent and accelerating our deleveraging
target from 2026.
As previously announced, we are advancing a $5+ billion asset
divestiture program this year. We anticipate a combination of
strong market interest and compelling valuations will support
upsizing the program to fully fund our industry-leading secured
capital program and achieve our deleveraging target. We maintain
our intent to cease the discounted Dividend Reinvestment Plan
following the dividend declarations for the quarter ending June 30,
2023.
“Our strategic priorities for 2023 remain unchanged. Our focus
is on safe project execution and operational excellence,
strengthening our balance sheet and financial flexibility,
enhancing returns on our assets, and advancing our decarbonization
and low-carbon opportunities,” said Poirier.
About TC EnergyWe’re a team of 7,000+ energy
problem solvers working to move, generate and store the energy
North America relies on. Today, we’re taking action to make that
energy more sustainable and more secure. We’re innovating and
modernizing to reduce emissions from our business. And, we’re
delivering new energy solutions – from natural gas and renewables
to carbon capture and hydrogen – to help other businesses and
industries decarbonize too. Along the way, we invest in communities
and partner with our neighbours, customers and governments to build
the energy system of the future.
TC Energy’s common shares trade on the Toronto (TSX) and New
York (NYSE) stock exchanges under the symbol TRP. To learn more,
visit us at TCEnergy.com.
FORWARD-LOOKING INFORMATIONThis release
contains certain information that is forward-looking and is subject
to important risks and uncertainties (such statements are usually
accompanied by words such as “anticipate”, “expect”, “believe”,
“may”, “will”, “should”, “estimate”, “intend” or other similar
words). Forward-looking statements in this document may include,
but are not limited to, statements regarding the Company’s expected
schedules and costs of planned projects, expected cost recoveries,
expected cash flows, expected future financing options available,
expectations regarding the size, timing and outcome of the asset
divestiture program, expected dividend growth, expected duration of
discounted DRP issuance from treasury, and expected access to and
cost of capital. Key assumptions on which our forward-looking
information is based include, but are not limited to, assumptions
about the realization of expected benefits from divestitures,
anticipated construction costs, schedules and completion dates,
access to capital markets, expected industry, market and economic
conditions, inflation rates, foreign exchange and interest rates.
Forward-looking statements in this document are intended to provide
TC Energy security holders and potential investors with information
regarding TC Energy and its subsidiaries, including management's
assessment of TC Energy’s and its subsidiaries’ future plans and
financial outlook. All forward-looking statements reflect TC
Energy’s beliefs and assumptions based on information available at
the time the statements were made and as such are not guarantees of
future performance. As actual results could vary significantly from
the forward-looking information, you should not put undue reliance
on forward-looking information and should not use future-oriented
information or financial outlooks for anything other than their
intended purpose. We do not update our forward-looking information
due to new information or future events, unless we are required to
by law. For additional information on the assumptions made, and the
risks and uncertainties which could cause actual results to differ
from the anticipated results, refer to the most recent Quarterly
Report to Shareholders and Annual Report filed under TC Energy’s
profile on SEDAR at www.sedar.com and with the U.S. Securities and
Exchange Commission at www.sec.gov.
-30-
Media Inquiries:Stone Grissom / Suzanne
Wiltonmedia@tcenergy.com 403-920-7859 or 800-608-7859
Investor & Analyst Inquiries:Gavin Wylie /
Hunter Mauinvestor_relations@tcenergy.com403-920-7911 or
800-361-6522
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