Canada’s TC Energy reports Q1 loss on Keystone XL
Canadian energy infrastructure company TC Energy said May 7 it had a Q1 2021 net loss of C$1.1bn (US$900mn). It said that was mostly due to a $2.2bn impairment taken when US president Joe Biden revoked the presidential permit for the Keystone XL crude oil pipeline project in January. Net income in Q1 2020 was C$1.1bn.
Comparable earnings for the quarter were C$1.1bn, unchanged from a year ago, while comparable Ebitda slipped to C$2.49bn from C$2.53bn, reflecting reduced contributions from Mexico gas pipelines, liquids pipelines and power and storage operations.
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Net cash provided by operations dipped to C$1.66bn from C$1.72bn, while comparable funds generated from operations slipped to C$2.02bn from C$2.09bn.
“During the first three months of 2021, our diversified portfolio of essential energy infrastructure continued to perform very well,” CEO Francois Poirier said. “Robust comparable earnings and cash generation once again highlight the resiliency of our assets and how imperative they are to the North American economy as we deliver the energy and advance projects vital to our way of life in a safe and reliable manner.”
While expressing disappointment with the revocation of the Keystone XL permits, Poirier pointed to TC Energy’s C$20bn secured capital programme and additional “high-quality” opportunities that are under development, including some that target the ongoing energy transition.
“We are exploring opportunities to electrify and use renewable energy to power certain of the company's proprietary energy loads, with the goal of a net reduction in emissions across our footprint,” he said. “In all our operations and projects, we remain focused on managing, reducing or eliminating our greenhouse gas emissions to the fullest extent possible.”
In Canada, TC Energy repeated its expectation that project costs associated with the 2.1bn ft3/day Coastal GasLink (CGL) pipeline that will deliver natural gas to the Anglo-Dutch Shell-led LNG Canada project on the west coast will “increase significantly” due to scope changes, permit delays and work slowdowns related to Covid-19 mitigation efforts.
“Coastal GasLink will continue to mitigate cost increases and schedule deferrals and is working with LNG Canada on establishing a revised project plan and budget,” TC Energy said, noting that incremental costs will be included in the final pipeline tolls and its equity contributions to the project are not expected to rise.
In 2020, TC Energy sold a 65% stake in CGL to a partnership of KKR & Co and Alberta Investment Management Co, retaining a 25% equity interest for itself and reserving the final 10% interest for future equity participation by any or all of the 20 BC First Nations along the 670-km route of the pipeline.
In the US, the first phase of TC Energy’s Grand Chenier XPress project on its ANR pipeline system, enhancing access to US Gulf Coast LNG export terminals, was placed in service in April. The second phase is expected to be placed in service early next year.
And in Mexico, construction of the Villa de Reyes pipeline, which will provide 886mn ft3/day of natural gas transportation service to power generation facilities in central Mexico, has been delayed by Covid-19 contingency measures which have impeded the issuance of work authorisations. Construction, however, is expected to be completed this year.