TC Energy Corp. has completed the northern portion of its Southeast Gateway and is moving to start commercial operations of its Coastal GasLink (CGL) supplying feed gas to LNG Canada.
Management for the Calgary-based pipeline giant provided updates on major projects during a first quarter earnings call.
In Mexico, TC has installed more than 70% of the offshore pipe for the Southeast Gateway pipeline project. The 1.3 Bcf/d, 444-mile long pipeline (with 416 miles offshore) remains on schedule to come online by mid-2025 and within its $4.5 billion budget, CEO François Poirier said.
All three landfall sites for the Southeast Gateway have been completed. The offshore vessel is in port for maintenance but will soon go back out to complete about 117 miles of the southern portion of the deepwater pipeline, COO Stanley Chapman said.
In addition, as part of a negotiated partnership, Mexico’s state power company Comisión Federal de Electricidad has received approvals to purchase a 15% investment in TC Energy’s Mexico-based subsidiary TGNH. “We are in the final throes of negotiating documentation,” Poirier said.
In Canada, the 2.1 Bcf/d CGL pipeline is expected to begin delivering feed gas this year to Shell plc-led liquefied natural gas export facility, CFO Joel Hunter said. LNG Canada was preparing to begin start-up activities ahead of exports in 2025.
Poirier said the company was also ready to support the Cedar LNG project, which would also be supplied with feed gas by CGL. Pembina Pipeline Corp. and its project partners recently disclosed that they had given a notice to proceed to their contractors and were working on finalizing financial arrangements by the summer.
“We're very excited and very happy for them to be making positive progress on the project… This is a project that we are contractually committed to proceeding with. We are in the process of advancing our development of the project cost and execution plan,” Poirier said.
Operational Milestones
TC, which reports in Canadian dollars (C$1.00/US73 cents), said it delivered record amounts of natural gas on several of its pipeline systems in the first quarter.
The Nova Gas Transmission Ltd. (NGTL) pipeline system in Western Canada averaged 15.3 Bcf/d of gas deliveries, up 0.7 Bcf/d from a year earlier. The NGTL system achieved a daily record of 17.3 Bcf/d deliveries in January.
In Mexico, natural gas flows reached almost 3 Bcf/d, up 14% from a year earlier, driven by gains on the Sur de Texas pipeline.
TC’s U.S. natural gas pipelines averaged flows of 30 Bcf/d in the first quarter, up more than 5% from a year earlier. U.S. natural gas deliveries to power generators to a record average of 2.9 Bcf/d, up about 11% from a year earlier.
“Natural gas demand growth is continuing in powering the United States as electricity demand grows. 2023 was a record year for power burn across the United States and that strength is continuing into 2024,” Poirier said.
Demand from data centers would continue to add to that growth, Poirier said. Much of the demand for U.S. data center load was likely to show up via local distribution companies (LDC) rather than on its mainlines, Chapman said. TC serves eight of the 10 largest LDCs, including “data center hungry areas like Virginia and Wisconsin,” he said.
“We do see a meaningful load in growth opportunity and increased demand in coming years due to data centers,” Chapman said. “We continue to be bullish on Appalachian production” that is only constrained by takeaway capacity, he said. TC owns the Columbia Gas Transmission system that is one of two pipelines that run to the data center-heavy northern Virginia.
“When you look at our systems and the path that we can deliver from TCO Pool over to these data centers in places like Virginia in particular, it uniquely positions us amongst our peers,” Chapman said.
The NGI equivalent price point to TCO Pool, Columbia Gas, was priced at an average US$1.600/MMBtu on Wednesday.
TC reported net income of $1.2 billion ($1.16/share) in 1Q2024, compared with a net profit of $1.3 billion ($1.29) in the year-ago period. Revenues totaled $4.2 billion in the quarter, versus $3.9 billion a year earlier.
