TC Energy to Build Keystone XL Pipeline
“We appreciate the ongoing backing of landowners, customers, Indigenous groups, and numerous partners in the U.S. and Canada who helped us secure project support and key regulatory approvals as this important energy infrastructure project is poised to put thousands of people to work, generate substantial economic benefits, and strengthen the continent’s energy security,” said Russ Girling, TC Energy’s president and CEO.
The 1210-mile long project will be capable of safely delivering 830,000 bbld of crude oil from Hardisty, Alta., to Steele City, Neb., where it will connect with TC Energy’s existing facilities to reach U.S. Gulf Coast refiners. The pipeline is expect to enter service in 2023.
The project is underpinned by new 20-year transportation service agreements of 575,000 bbld with a group of strong counterparties, which are expected to generate approximately $1.3 billion in earnings annually before EBITDA. In addition, once the project is in service, current contracts for 115,000 bbld from Hardisty to the Gulf Coast on the existing Keystone line will shift to the new facilities under renewed 20-year contracts.
As part of the funding plan, the government of Alberta has agreed to invest approximately $1.1 billion as equity, substantially covering construction costs through the end of this year. The remaining investment of approximately $6.9 billion, primarily set for 2021 and 2022, will be funded through a $4.2 billion project level credit facility to be fully guaranteed by the government of Alberta and a $2.7 billion investment by TC Energy.
“Strong commercial and financial support positions us to prudently build and fund the project, along with our existing $30 billion secured capital program, in a manner that is consistent and maintaining our strong financial position and credit metrics,” added Girling. “Once completed, approximately 98% of the company’s consolidated EBITDA is expected to come from regulated or long-term contracted assets.”
Among the benefits and highlights of the project are advances in continental energy security; safer and less-GHG intensive than current methods of transporting crude oil to market; six comprehensive scientific reviews by the U.S. State Department over the past decade concluding that the project can be built and operated in an environmentally sustainable and responsible way; and tens of millions of dollars in property and income taxes will be collected annually every year of operation.
SOURCE: The Weekly Propane Newsletter, April 2, 2020. Subscribe to receive all the latest posted and spot prices from all major terminals and refineries around the U.S., featuring a center spread of posted prices that includes hundreds of postings completely updated each week, market analysis, insightful commentary and more.
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