It was a good news/bad news story for Canada’s largest pipeline operator on Wednesday, after Calgary-based TC Energy reported a rare quarterly loss.The good news is the long-awaited Coastal GasLink pipeline — the first of any kind to the West Coast in 70 years — is ‘mechanically’ complete and awaiting its first natural gas deliveries for exports to overseas markets.The final, ‘golden weld’ was completed on October 7.The bad news is the company was forced to take a $1.18-billion impairment charge that resulted in a net loss of of $197 million in the third quarter, compared to earnings of $841 million a year ago.That’s even though gross revenues for the quarter were up to $3.94 billion from $3.8 billion in the third quarter of 2022..“Coastal GasLink is Canada's first pipeline to the West Coast in 70 years and once operational, it will be the first direct path for Canadian natural gas to reach global markets,”TC CEO Francois Poirier.Still, company officials were upbeat about the prospect of being able to export natural gas from Canadian shores instead of the Gulf of Mexico.“Coastal GasLink is Canada's first pipeline to the West Coast in 70 years and once operational, it will be the first direct path for Canadian natural gas to reach global markets,” CEO Francois Poirier told analysts on a conference call.“After five years of construction and 55 million hours worked, we've now achieved the monumental milestone of mechanical completion on Coastal GasLink and we achieved this ahead of our year-end target.”The next steps are the introduction of natural gas into the pipe itself, commissioning and land reclamation work across the route.The added good news angle is the company doesn’t expect it to cost any more than the revised $14.5 billion estimate at the start of the year. That was up 29% from an earlier estimate of $11.2 billion in July of 2022 and an original estimate of $6.6 billion when construction began in 2019.TC had previously warned that it could have been forced to add an additional $1.2 billion if construction on the 670-kilometre line extended into late 2024 — which it has..That’s despite a host of problems including a shortage of skilled labour, contractor disputes, protests and other “unexpected” events such as drought, erosion and sediment control challenges that resulted in a $350,000 fine as recently as September.Over the five-year construction period it also had to endure incidents of extreme vandalism and blockades related to more than 50 warnings and citations from BC regulators.No arrests were made in the vandalism incidents but on Tuesday a Smithers judge sentenced two protesters to a combined 300 hours of community service for criminal contempt in relation to a 56-day occupation of a company worksite.While TC said it is pursuing potential recoveries from shippers to offset a portion of the cost increase, the impairment charge is meant to offset those losses. It’s on top of $3 billion in charges last year related to the company’s 35% interest in the Coastal GasLink partnership.According to CFO Joel Hunter that figure could fall to 25% if First Nations groups exercise options to acquire 10% of the line.“So we don't have obviously significant ownership in the project. And when we look at the amount that we've had to impair… you can read into that, that there's not going to be a significant return for us here on this project going forward,” he said.
It was a good news/bad news story for Canada’s largest pipeline operator on Wednesday, after Calgary-based TC Energy reported a rare quarterly loss.The good news is the long-awaited Coastal GasLink pipeline — the first of any kind to the West Coast in 70 years — is ‘mechanically’ complete and awaiting its first natural gas deliveries for exports to overseas markets.The final, ‘golden weld’ was completed on October 7.The bad news is the company was forced to take a $1.18-billion impairment charge that resulted in a net loss of of $197 million in the third quarter, compared to earnings of $841 million a year ago.That’s even though gross revenues for the quarter were up to $3.94 billion from $3.8 billion in the third quarter of 2022..“Coastal GasLink is Canada's first pipeline to the West Coast in 70 years and once operational, it will be the first direct path for Canadian natural gas to reach global markets,”TC CEO Francois Poirier.Still, company officials were upbeat about the prospect of being able to export natural gas from Canadian shores instead of the Gulf of Mexico.“Coastal GasLink is Canada's first pipeline to the West Coast in 70 years and once operational, it will be the first direct path for Canadian natural gas to reach global markets,” CEO Francois Poirier told analysts on a conference call.“After five years of construction and 55 million hours worked, we've now achieved the monumental milestone of mechanical completion on Coastal GasLink and we achieved this ahead of our year-end target.”The next steps are the introduction of natural gas into the pipe itself, commissioning and land reclamation work across the route.The added good news angle is the company doesn’t expect it to cost any more than the revised $14.5 billion estimate at the start of the year. That was up 29% from an earlier estimate of $11.2 billion in July of 2022 and an original estimate of $6.6 billion when construction began in 2019.TC had previously warned that it could have been forced to add an additional $1.2 billion if construction on the 670-kilometre line extended into late 2024 — which it has..That’s despite a host of problems including a shortage of skilled labour, contractor disputes, protests and other “unexpected” events such as drought, erosion and sediment control challenges that resulted in a $350,000 fine as recently as September.Over the five-year construction period it also had to endure incidents of extreme vandalism and blockades related to more than 50 warnings and citations from BC regulators.No arrests were made in the vandalism incidents but on Tuesday a Smithers judge sentenced two protesters to a combined 300 hours of community service for criminal contempt in relation to a 56-day occupation of a company worksite.While TC said it is pursuing potential recoveries from shippers to offset a portion of the cost increase, the impairment charge is meant to offset those losses. It’s on top of $3 billion in charges last year related to the company’s 35% interest in the Coastal GasLink partnership.According to CFO Joel Hunter that figure could fall to 25% if First Nations groups exercise options to acquire 10% of the line.“So we don't have obviously significant ownership in the project. And when we look at the amount that we've had to impair… you can read into that, that there's not going to be a significant return for us here on this project going forward,” he said.
