TC Energy to Build Keystone XL Pipeline
March 31 2020 - 7:01AM
– News Release – TC Energy Corporation (TSX, NYSE: TRP)
(TC Energy or the Company) today announced that it will
proceed with construction of the Keystone XL Pipeline Project (the
Project), resulting in an investment of approximately US$8.0
billion into the North American economy.
“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 Chief Executive Officer. “In addition, we
thank U.S. President Donald Trump and Alberta Premier Jason Kenney
as well as many government officials across North America for their
advocacy without which, individually and collectively, this Project
could not have advanced.”
At 1,210-miles (1,947-kilometres) in length, the Project will be
capable of safely delivering 830,000 barrels per day (Bbl/day) of
crude oil from Hardisty, Alberta to Steele City, Nebraska where it
will connect with TC Energy’s existing facilities to reach U.S.
Gulf Coast refiners to meet critical needs for transportation fuel
and useful manufactured products. With pre-construction activities
underway, the pipeline is expected to enter service in 2023.
“During construction, we will continue to take guidance from all
levels of government and health authorities to determine the most
proactive and responsible actions in order to ensure the safety of
our crews and community members during the current COVID-19
situation. Construction will advance only after every consideration
for the health and safety of our people, their families and of
those in the surrounding communities has been taken into account,”
said Girling.
The Project is underpinned by new 20-year transportation service
agreements for 575,000 Bbl/day with a group of strong,
credit-worthy counterparties which are expected to generate
approximately US$1.3 billion of earnings before interest, taxes,
depreciation and amortization (EBITDA) on an annual basis. In
addition, once the Project is in service, current contracts for
115,000 Bbl/day from Hardisty to the U.S. Gulf Coast on the
existing Keystone line will shift to the new facilities under
renewed 20-year contracts. Subject to terms and conditions outlined
in the agreements, 50 per cent of any difference between the
estimated capital cost and final cost of the Project are subject to
a sharing mechanism and will be reflected in the pipeline
tolls.
As part of the funding plan, the Government of Alberta has
agreed to invest approximately US$1.1 billion as equity in the
Project, which substantially covers planned construction costs
through the end of 2020. The remaining capital investment of
approximately US$6.9 billion is expected to be largely made in 2021
and 2022 and funded through the combination of a US$4.2 billion
project level credit facility to be fully guaranteed by the
Government of Alberta and a US$2.7 billion investment by TC
Energy.
The Company’s capital investment will be funded through a
combination of internally generated cash flow, hybrid securities
and common equity through the activation of its dividend
reinvestment program in 2021 and 2022. To provide additional
financial flexibility in support of its credit metrics and capital
program, including the Project, the Company intends to also file a
$1.0 billion equity shelf to enable an at-the-market equity
issuance program which will be utilized if and as deemed
appropriate. Once the Project is completed and placed into service,
TC Energy expects to acquire the Government of Alberta’s equity
investment under agreed terms and conditions and to refinance the
US$4.2 billion credit facility in the debt capital markets.
“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
with maintaining our strong financial position and credit metrics,”
added Girling. “Once completed, approximately 98 per cent of the
Company’s consolidated EBITDA is expected to come from regulated or
long-term contracted assets.”
Project highlights
- Thousands of well-paying jobs during construction
- Advances continental energy security
- Tens of millions in property and income taxes through every
year of operation
- Six comprehensive scientific reviews by the U.S. Department of
State over the past decade concluding that the project can be built
and operated in an environmentally sustainable and responsible
way
- Safer and less-GHG intensive than current methods of
transporting crude oil to market
- Thousands of stakeholders engaged, including landowners,
community members and Indigenous communities
For additional information on the project, visit
Keystone-XL.com
About TC EnergyWe are a vital part of everyday
life – delivering the energy millions of people rely on to power
their lives in a sustainable way. Thanks to a safe, reliable
network of natural gas and crude oil pipelines, along with power
generation and storage facilities, wherever life happens – we’re
there. Guided by our core values of safety, responsibility,
collaboration and integrity, our more than 7,300 people make a
positive difference in the communities where we operate across
Canada, the U.S. and Mexico.
TC Energy’s common shares trade on the Toronto (TSX) and New
York (NYSE) stock exchanges under the symbol TRP. To learn more,
visit us at TCEnergy.com.
FORWARD-LOOKING INFORMATION
This release contains certain information that is
forward-looking and is subject to important risks and uncertainties
(such statements are usually accompanied by words such as
"anticipate", "expect", "believe", "may", "will", "should",
"estimate", "intend" or other similar words). Forward-looking
statements in this document are intended to provide TC Energy
security holders and potential investors with information regarding
TC Energy and its subsidiaries, including management's assessment
of TC Energy's and its subsidiaries' future plans and financial
outlook. All forward-looking statements reflect TC Energy's beliefs
and assumptions based on information available at the time the
statements were made and as such are not guarantees of future
performance. As actual results could vary significantly from the
forward-looking information, you should not put undue reliance on
forward-looking information and should not use future-oriented
information or financial outlooks for anything other than their
intended purpose. We do not update our forward-looking information
due to new information or future events, unless we are required to
by law. For additional information on the assumptions made, and the
risks and uncertainties which could cause actual results to differ
from the anticipated results, refer to the Fourth Quarter 2019
Financial Highlights release and the 2019 Annual Report filed under
TC Energy's profile on SEDAR at www.sedar.com and with the U.S.
Securities and Exchange Commission at www.sec.gov.
Media Inquiries:Terry Cunha403.920.7859 or
800.608.7859
Investor & Analyst Inquiries:David Moneta /
Duane Alexander403.920.7911 or 800.361.6522
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