TC Energy confirms 70% cost increase for Coastal GasLink
TC Energy has settled its dispute with LNG Canada's operating consortium over the cost of the Coastal GasLink project in northern British Columbia, but now estimates it will cost $11.2bn to deliver, compared to $6.6bn previously.
CGL will supply 2.1bn ft3/day of feed gas from fields in northeast British Columbia to the Shell-led LNG Canada project, under construction near Kitimat on BC's northern coast.
The project has struggled due to protests from BC's indigenous communities, which TC Energy later settled with an equity option agreement for 10% with First Nations investment groups, as well as mounting costs associated with the delayed delivery schedule, including impacts from the COVID-19 pandemic.
TC Energy hailed the settlement as a "significant milestone" that establishes a better framework for project advancement in partnership with LNG Canada, as part of a strengthened "long-term partnership".
"The agreements resolve uncertainty over specific and anticipated costs, mitigate project funding and execution risks and allow us to continue the safe and timely execution of the project," the company said in its second quarter results update. "We continue to believe the project remains economically viable and, subject to an FID, we anticipate a potential second phase of CoastalGasLink could enhance TC Energy's project returns."
Some 70% of the 670-km pipeline has been completed, with two of eight sections fully built. TC Energy expects the project to enter "mechanical in-service" by the end of 2023. In its existing Canadian gas pipe portfolio, TC Energy said EBITDA in the second quarter amounted to $681mn, compared to $684mn in 2021, while the US equivalent rose from $879mn to $915mn yr/yr.