TC Energy Proceeds with Keystone XL After Alberta Commits $1.1 Billion
TORONTO (Reuters) — TC Energy Corp on Tuesday said it would start construction on the $8 billion Keystone XL pipeline after securing financial backing for the project from the Alberta government, pushing the long-delayed pipeline closer to fruition.
Alberta, home of the world's third-largest oil reserves, has struggled for years as congested pipelines weakened prices and forced the provincial government to curtail production. Many companies in the province have cut capital spending as well due to the twin shocks of the Saudi-Russia oil price war and the fast-spreading coronavirus outbreak.
Imperial Oil Ltd on Tuesday became the latest producer to retrench, saying it would halt share repurchases and cut 2020 spending by 30%, or C$500 million ($351.00 million).
The Keystone XL pipeline, which would carry 830,000 barrels per day of crude from Alberta to the U.S. Midwest, has been delayed for more than a decade by opposition from landowners, environmental groups and tribes.
TC Energy shares were up 4.3% in midmorning trading.
Alberta would make a $1.1 billion equity investment into the project and provide a $4.2 billion loan guarantee. Construction could start as soon as this week, it said.
"We cannot wait for the end of the pandemic and the global recession to act," Alberta Premier Jason Kenney said in a statement.
The support would substantially cover construction costs through the end of 2020, TC Energy said, with the balance funded through a $2.7 billion investment by the company.
The government backing removes a key hurdle for the project, said Jackie Forrest, vice-president at the ARC Energy Research Institute in Calgary. But it still faces legal challenges.
"One of the key risks has always been that you put money into this and the politics in the U.S. change, and you aren’t able to complete the project," she said.
TC Energy expects to buy the Alberta government's stake once the project enters service in 2023. It also plans to raise about $1 billion by selling some of its shares.
The company, which had planned to start mobilizing heavy construction equipment in February, said last month that there was too much uncertainty to commit immediately to the project.
Alberta's support is the second direct investment by a Canadian government in a major pipeline project. Canada in 2018 paid C$4.5 billion to acquire the Trans Mountain pipeline and expansion project, despite formidable political and environmental opposition.
Related News
From Archive
- NTSB publishes preliminary report on fatal gas pipeline explosion in Lexington, Mo.
- 290-mile gas pipeline expansion proposed across Georgia, Alabama and South Carolina
- Ripple Fiber breaks ground on $140 million project, expanding into central Mass.
- City of Albuquerque halts fiber optic construction in response to damage, complaints
- Body retrieved day after fatal trench collapse at Bakersfield, Calif., job site
- Gehl and Mustang offer world’s largest skid loader
- Growing Pains and Gains
- Maryland lawmakers push to curb BGE pipeline spending, citing safety and cost concerns
- Authorities investigating trench collapse that killed worker in Ashburn, Va.
- City of Albuquerque halts fiber optic construction in response to damage, complaints
Comments