TC Energy Raises Coastal GasLink Pipeline Costs by 30% to Over $10 Billion
(Reuters) — North American pipeline firm TC Energy Corp. said on Wednesday it now estimates costs for completion of its troubled Coastal GasLink project to be C$14.5 billion ($10.89 billion), as it faces skilled labor crunch and adverse weather conditions.
U.S.-listed shares of the pipeline operator were down 2.6% at $42 in pre-market trading.
The costs are now up 30% from the project's previously pegged completion cost of C$11.2 billion, which was already raised by 70% in July from the initial budget.
RELATED: 416-Mile Coastal GasLink Pipeline Project Nears Completion
First announced in 2018, the 670-km (416-mile) pipeline will transport natural gas to the Shell Plc-led LNG Canada facility on the west coast of British Columbia, Canada's first LNG export terminal.
The long-delayed pipeline is expected to be integral to Canada's contribution to the global LNG market, which has seen demand surge as Europe and Asia seek alternatives to Russian energy imports.
The project has faced several construction delays due to COVID-19 disruptions and protests from environmentalists and some First Nations.
Coastal GasLink's workers were also attacked by masked assailants in February last year, damaging equipment and construction trailers worth millions of dollars.
TC Energy raised its overall 2023 capital expenditure outlook to about C$11.5 billion-C$12 billion from C$9.5 billion earlier, partly due to the higher costs associated with the project.
An impairment will be recognized to TC Energy's equity investment in Coastal GasLink LP in its fourth-quarter financial results scheduled for on Feb. 14, due to the increase in the expected costs and the additional funding required, it said.
Costs could increase by another C$1.2 billion if construction is extended well into 2024, it added.
Though the cost increase was "disappointing", CEO François Poirier said the company remains focused on safely completing the project at the lowest possible cost.
($1 = 1.3309 Canadian dollars)
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