Canadian TC Energy boots cost estimate for Coastal GasLink pipeline to C$14.5 billion

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TC Energy Corp. raised the estimated cost of its Coastal GasLink natural gas pipeline in British Columbia to C$14.5 billion and said it would book an impairment related to the cost jump in its fourth-quarter 2022 financial results.

Coastal GasLink Pipeline Ltd. faces cost pressures arising from labor challenges, including a shortage of skilled workers; contractor underperformance and disputes; and issues such as erosion and drought, TC Energy said in a Feb. 1 news release.

TC Energy warned in November 2022 that it expected a material cost increase for the 2.1-Bcf/d greenfield pipeline and would provide an update early in 2023. The Canadian midstream company already issued an increased cost estimate of C$11.2 billion in July 2022.

The Coastal GasLink project is about 83% complete, with mechanical completion expected by the end of 2023 and commissioning and clean-up continuing into 2025, the company said. Should construction be delayed "well into 2024," TC Energy estimated that costs could rise by up to another C$1.2 billion.

TC Energy noted that its latest estimates do not include any potential cost recoveries that it is pursuing.

In March 2022, TC Energy said it would sell a 10% stake of Coastal GasLink Pipeline to Indigenous communities on the pipeline corridor. It has faced tough opposition from Indigenous groups, with protests including blockades of rail lines.

[Tim Siccion]

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