TC Energy Sees Promise in LNG Exports as Key Projects Wind Down

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Researched by Industrial Info Resources (Sugar Land, Texas)--As it nears the finish line on one of its most ambitious pipeline projects, TC Energy (NYSE:TRP) (Calgary, Alberta) expects to spend more steadily in years to come on projects that align with its natural gas-focused portfolio, with cautious movement into the low-carbon and renewable markets. Attention likely will be focused on U.S. export facilities for liquefied natural gas (LNG), for which TC Energy reported record-high deliveries in the first quarter of 2023. Industrial Info is tracking more than US$14 billion worth of projects from TC Energy, more than half of which is attributed to grassroot projects.

Click on the image at right for a graph detailing the top 10 U.S. states and Canadian provinces for TC Energy's active projects.

Executives say TC Energy is "laser-focused" on finishing its US$4.28 billion Coastal GasLink natural gas pipeline, which will carry up to 2.1 billion cubic feet per day of natural gas about 422 miles, from Groundbirch, British Columbia, to the proposed Canada LNG export facility near the port of Kitimat, British Columbia. If completed as planned, executives believe the capacity eventually could be expanded to 5 billion cubic feet per day. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Pipeline Database can learn more in a detailed project report.

"I'm pleased to share that Coastal GasLink is continuing along our revised cost and schedule and progressed through the winter on plan," said Francois Poirier, the chief executive officer of TC Energy, in a quarterly earnings-related conference call. "We accomplished several major milestones, with the overall project now 87% complete. Approximately 570 kilometers [354 miles] of the 670 kilometers of pipeline has been backfilled, and restoration activities are underway in many areas."

Poirier noted that commissioning work on a US$100 million compressor station east of Dawson Creek, British Columbia, already has begun, and more than 85% of all necessary water crossings have been completed: "[We] are now installing the final pipe through this critical path section. We continue to target mechanical completion by the end of the year."

Other compressor stations under construction as part of Coastal GasLink include a US$120 million station east of Fraser Lake, a US$100 million station west of Tumbler Ridge and a US$100 million station south of Houston, all in British Columbia. Each station--and the pipeline itself--began construction in early 2019. Subscribers can read detailed reports on the Dawson Creek, Fraser Lake, Tumbler Ridge and Houston compressor stations.

Stanley Chapman, the executive vice president and group executive of U.S. and Mexico Natural Gas Pipelines for TC Energy, said in the earnings call that going forward, TC Energy's biggest challenge is "less with originating new projects--it's making sure that we have a way to fund them." Chapman pointed to the ongoing buildout in LNG-export capacity, particularly in Louisiana, as a corner of the market where TC Energy can "leverage our existing footprint."

TC Energy's ongoing projects in Louisiana include its $155 million East Lateral XPress (ELXP) project, which will carry 725 million standard cubic feet per day of natural gas from TC Energy's Columbia Gulf Transmission Pipeline to a new delivery point in Plaquemines Parish, where the gas will be routed to Venture Global's new Plaquemines LNG export facility. The ELXP will be supported by the $85 million Golden Meadow Compressor Station near Thibodaux and an $85 million compressor station near Centerville. Subscribers can read detailed reports on the ELXP pipeline and the compressor stations near Thibodaux and Centerville.

Following this slate of high-value projects, Poirier said he expects the company will take a more restrained view of capital spending in the years to come: "Post 2024, we are committing to limiting annual sanctioned capital expenditures to $7 billion or less. In fact, we will strive to manage annual capital spending to approximately $6 billion, providing the flexibility to further reduce leverage or buyback common shares. When sanctioning new projects, a key consideration will be the timing of the capital spend and it must fit within our annual capital expenditure parameters and deleveraging targets."

Poirier says the company is exploring some renewable-energy investments--which he calls "very small capital dollars, tens of millions to low hundreds of millions over time"--as it begins to prioritize a more stable balance sheet. TC Energy is preparing to begin construction later this year on US$125 million Saddlebrook Solar Farm in Aldersyde, Alberta, which is expected to generate 81 megawatts (MW) from more than 185,000 photovoltaic (PV) panels. It is accompanied by an $8.5 million battery energy-storage system (BESS) and will be TC Energy's first solar project in Canada. Subscribers can read detailed reports on the solar and BESS projects.

TC Energy's net income totaled $1.3 billion in first-quarter 2023, compared with $400 million in the same period last year. Executives attributed the growth to stronger throughput in its natural gas pipeline systems.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).