The estimated cost of the Coastal GasLink natural gas pipeline in northern British Columbia has soared 70 per cent to $11.2-billion, but operator TC Energy Corp. It says it’s about optimism construction on the project by the end of 2023.
The project previously carried a price tag of $6.6-billion for the 670-kilometre pipeline, which is designed to transport natural gas from northeast BC to LNG Canada’s $18-billion export terminal that is under construction in Kitimat, BC
“Capital costs have increased from the original project cost estimate due to scope increases and the impacts of COVID-19, weather and other events outside of Coastal GasLink LP’s control,” TC Energy said in a statement on Thursday as part of its second-quarter financial results. “We continue to believe the project remains economically viable.”
TC Energy chief executive officer François Poiri said Coastal GasLink has resolved a dispute over costs with LNG Canada.
“Our revised agreements with LNG Canada establish a better framework for project advancement and one that further strengthens our long-term partnership,” he said during a conference call with industry analysts.
Calgary-based TC Energy plans to make a $1.9-billion contribution equity toward Coastal GasLink, starting with its first installation next month. “We currently estimate our portion of the equity contributions to Coastal GasLink LP over the project equity life to be approximately $2.1-billion, including the $1.9-billion contribution,” TC Energy said.
LNG Canada issued a statement to welcome TC Energy’s announcement.
“LNG Canada and its joint venture participants have reached a commercial resolution with Coastal GasLink (CGL) to address CGL’s cost and schedule performance,” said Denita McKnight, LNG Canada’s vice-president of corporate relations. “This positive step allows both companies to progress forward with a renewed focus on delivering the pipeline within the revised cost estimate, and to support LNG Canada’s first LNG cargo by the middle of this decade.”
Coastal GasLink said on Thursday that it has hit a milestone that shows 66 per cent overall progress on the project, including engineering and procurement, with 58.5 per cent of construction completed.
The goal is to complete the pipeline by late 2023, start testing the line in 2024 and have Shell PLC-led LNG Canada start shipping liquefied natural gas in 2025 for export on Asia-bound tankers.
TC Energy completed the sale of a 65-per-cent stake in the pipeline venture in 2020 to Alberta Investment Management Corp. and KKR & Co. Inc.
TC Energy, which currently owns 35 per cent of Coastal GasLink, announced a deal in March to set aside a 10-per-cent equity stake for the sale to up to 20 elected First Nation councils along the pipeline route.
Those elected band councils of 20 Indigenous communities along the route have agreed to support the pipeline. But the Office of the Wet’suwet’en, a non-profit society that represents hereditary chiefs who oppose the pipeline, maintains that elected indigenous leaders don’t have jurisdiction over the Wet’suwet’en’s traditional, off-reserve territory.
A group of Wet’suwet’en hereditary chiefs and their supporters have staged a series of protests at Coastal GasLink construction areas near Houston, BC, over the past four years.
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