Piping is seen on the top of a receiving platform which will be connected to the Coastal GasLink natural gas pipeline terminus at the LNG Canada export terminal under construction, in Kitimat, B.C., on Wednesday, September 28, 2022. THE CANADIAN PRESS/Darryl Dyck
CALGARY – TC Energy Corp. expects to be able to indicate this summer whether it will complete the Coastal GasLink pipeline by its end-of-year target or not.
The Calgary-based pipeline company, which has been dogged by unexpected construction issues and rising labour costs for the project, said earlier this month that it has raised the estimated cost of the pipeline to $14.5 billion, up from an earlier estimate of $11.2 billion.
Construction of the pipeline is approximately 84 per cent complete. However, TC Energy has warned that if construction extends well into 2024, it could add an additional $1.2 billion to the project’s cost.
On a conference call with analysts Tuesday, CEO François Poirier said the company still believes it can finish the project by the end of 2023, and is working toward that goal with a “relentless focus.”
“There’s not a day that goes by that is not critical,” Poirier said. “We have to execute, as we have been, safely and efficiently throughout the entire year.”
Some of the construction activities that remain to be completed can only be done during the winter months, executive vice-president Bevin Wirzba said, meaning TC Energy will know later this year whether it needs to push work into a new season.
“The best visibility that I can give you to whether we’ll complete mechanically by the end of the year is probably in the June, July time frame,” Wirzba said.
TC Energy Corp. reported a nearly $1.45-billion loss in its fourth quarter due to the rising cost of its Coastal GasLink project.
The company – which raised its dividend Tuesday to 93 cents per share, up from 90 cents per share – said it took a one-time pre-tax charge of $3 billion in the fourth quarter related to the increased cost of the project.
The Coastal GasLink project is a 670-km pipeline spanning northern British Columbia. It will carry natural gas across the province to the LNG Canada processing and export facility in Kitimat, B.C.
The company is pursuing potential recoveries from contractors to offset a portion of the rising costs.
TC Energy was also challenged in the fourth quarter by an oil spill from its Keystone pipeline in Washington County, Kansas.
The company has pegged the cost of cleanup and remediation of December’s spill at an estimated US$480 million, though TC Energy is hopeful most of those costs will be recoverable through insurance.
Richard Prior, president of liquids pipelines at TC Energy, said on Tuesday’s conference call that there are still 800 workers at the site of the spill involved in cleanup operations, and the company is also conducting an analysis of other segments of pipe to ensure that a similar event couldn’t happen elsewhere on the line.
The company’s own investigation has indicated the spill was due to a combination of factors, including bending stress on the pipe and a welding flaw, and that there were no issues with the strength or material properties of the pipe itself.
Poirier also said Tuesday that TC Energy remains confident in its earlier announced plan to divest at least $5-billion in assets this year, in order to pay down debt and fund new projects.
“I understand that there’s a lot of interest on what we’ll be selling and when. We are in market with a number of different processes and conversations, and we’re at a very sensitive time in those processes,” Poirier said.
“And so we’re going to refrain from commenting specifically on any process.”
TC Energy said its comparable earnings for the fourth quarter amounted to $1.11 per share, up from $1.05 per share a year earlier.
Analysts on average had expected a profit of $1.10 per share, according to estimates compiled by financial markets data firm Refinitiv.
This report by The Canadian Press was first published Feb. 14, 2023.
Companies in this story: (TSX:TRP)
