Construction of the Southeast Gateway and Coastal GasLink (CGL) natural gas pipeline projects is the top priority for TC Energy Corp. in 2023, management said.
CEO François Poirier hosted a conference call in late April to discuss the Calgary-based pipeline giant’s first quarter earnings.
In Mexico, the Southeast Gateway offshore pipeline remains on track to enter service in mid-2025. TC is developing the 1.3 Bcf/d pipeline in partnership with Mexico’s state power company Comisión Federal de Electricidad (CFE).
The project “is proceeding according to cost and schedule,” Poirier said. TC has “obtained key federal environmental authorizations and local permits for the project,” he added. “Critical long lead items including the offshore vessel have been secured and we’ve begun receiving materials. We anticipate commencing onshore construction for our compressor stations this summer.
“In fact, civil work has already begun and our offshore pipe installation will commence towards the end of 2023.”
Poirier highlighted that about 70% of Southeast Gateway’s total project costs are under fixed-price contracts, “providing greater certainty around cost and schedule, and we continue to target completion by mid-2025.”
Once Southeast Gateway is complete, “we expect that the project will play a critical role in advancing a reliable and secure energy transition in key demand centers in southeast Mexico,” TC management said.
TC also is aiming for the lateral and south sections of the Villa de Reyes pipeline to enter service this year. The completion dates of the central and west sections of the Tula pipeline, meanwhile, remain uncertain.
In other Mexico news, TC reported record flows on its Guadalajara pipeline due to higher power sector demand during the quarter. The pipeline supplies 500 MMcf/d of gas to a CFE power plant, and another 360 MMcf/d to Mexico’s Sistrangas national pipeline network.
TC is still targeting mechanical completion in late 2023 of the 2.1 Bcf/d, 416-mile CGL project in Western Canada, Poirier told analysts during the call. The pipeline would supply feed gas from the WCSB to the Shell plc-led LNG Canada liquefaction project under construction on the coast of British Columbia.
The total expected cost of CGL remains unchanged as of now at C$14.5 billion ($10.7 billion), the company said.
Alberta Egress Expansions
TC Energy Corp. is working to expand natural gas takeaway capacity from the Western Canadian Sedimentary Basin (WCSB) amid record demand for the fuel across North America, management said.
Poirier was joined by Greg Grant, president of Canadian natural gas pipelines.
Grant highlighted that TC added 700 MMcf/d of intra-basin capacity in Western Canada during 1Q2023, with another 500 MMcf/d slated to come online during the second quarter.
Demand and utilization levels remain strong across all points of egress out of the basin, Grant said, “so you will probably see in the next couple of weeks, months…some open seasons will be coming.”
Grant said his team is “looking at ways that we can continually optimize the system and create additional capacity where we can. That includes both existing and some new opportunities, which we’ll talk about in the following quarter.”
On the U.S. side of the border, TC is “anxiously awaiting our certificates” from the Federal Energy Regulatory Commission for the Gas Transmission Northwest Xpress (GTNXP) project, said Stanley Chapman III, president of U.S. and Mexico natural gas pipelines. The project would upgrade and expand capacity by 150 MMcf/d on the GTN system, which supplies Western Canadian gas to markets in the Western United States.
Pending the necessary approvals, TC is aiming to have the GTN expansion in service by early 2024, Chapman said.
“We also have the ability to attract volumes in our Great Lakes system,” Chapman said. “And the other thing I would point out of late is there seems to be some interest from the LNG market in Louisiana to have additional exposure to Canadian volumes as well. So we’re pursuing opportunities to expand our ANR systems as appropriate to get more Canadian gas down to the LNG terminals.”
Record LNG Sendout
TC placed $1.4 billion of projects into service during 1Q, with Canadian natural gas pipeline projects accounting for $1.1 billion.
Deliveries on the Nova Gas Transmission Ltd. (NGTL) system in Western Canada averaged 14.5 Bcf/d during the first quarter, compared to 14.2 Bcf/d in 1Q2022.
Throughput across TC’s U.S. natural gas pipelines averaged 28.5 Bcf/d “with several assets performing at near record levels during peak demand,” management said. The U.S. volumes compare to 30 Bcf/d in the year-ago period.
TC’s U.S. pipelines also achieved a new quarterly record for deliveries to LNG export facilities during the first three months of 2023, followed by a new daily record of 3.8 Bcf on April 21.
TC, which reports in Canadian dollars (C$1.00/US 74 cents), posted net income of $1.3 billion ($1.29/share) for the first quarter, versus net income of $358 million (36 cents) in the same period a year ago. Revenue totaled $3.93 billion, versus $3.5 billion a year earlier.
