Canada’s TC Energy to divide into gas, liquids entities

Canadian energy and infrastructure giant TC Energy said July 27 it would separate into two investment-grade, publicly listed companies by spinning off its liquids pipeline business.

The transaction, expected to be completed on a tax-free basis in the second half of 2024, will result in TC Energy continuing as a natural gas energy solutions company, integrating 93,700 km of existing gas pipeline operations in Canada, the US and Mexico.

The yet-to-be-named liquids pipeline company will operate 4,900 km of crude oil pipeline infrastructure delivering 16% of the crude oil exported from the Western Canadian Sedimentary Basin to PADD 2 and PADD 3 refinery markets.

The decision to create two stand-alone operations comes after a two-year strategic review, TC Energy CEO Francois Poirier said.

“Fundamentals have always driven our strategic direction, and as a result, we have grown into a premier energy company with incumbency across a wide range of energy infrastructure platforms,” he said. “As we have become the partner of choice for a magnitude of accretive, high-quality opportunities, we have determined that as two separate companies we can better execute on these distinct opportunity sets to unlock shareholder value.”

Poirier will remain as president and CEO of TC Energy, while Stanley Chapman III, currently executive vice-president and group executive, US and Mexico natural gas pipelines, will become executive vice-president and COO, Natural Gas Pipelines, charged with integrating TC Energy’s geographically dispersed natural gas business units into a single, unified natural gas pipelines business.

Bevin Wirzba, who is currently executive vice-president, group executive, Canadian natural gas and liquids pipelines and president of TC Energy’s Coastal GasLink subsidiary, will lead the liquids pipeline company as its president and CEO. 

The transaction will be implemented through a court-approved plan of arrangement under the Canada Business Corporations Act. In addition to TC Energy shareholder and court approvals, the transaction is subject to receipt of favourable tax rulings from Canadian and US tax authorities, receipt of necessary regulatory approvals and satisfaction of other customary closing conditions.

TC Energy shareholders will be asked to approve the transaction at a shareholders meeting planned for mid-2024.