TC Energy raises expected cost of Coastal GasLink project to $14.5B
The estimated cost of the Coastal GasLink pipeline has increased by 29 per cent to $14.5 billion, as the company behind the project continues to be dogged by unexpected construction issues and rising labour costs.
Calgary-based TC Energy Corp. released the new price tag, up from an earlier estimate of $11.2 billion, for the project on Wednesday.
The $11.2-billion figure, announced by the company last July, was itself a significant increase from an earlier cost projection of $6.6 billion.
“We are disappointed with the increase in the Coastal GasLink Project costs,” TC Energy chief executive Francois Poirier said in a release.
“We continue to be laser-focused on safely completing this critical piece of energy infrastructure at the lowest possible cost.”
The Coastal GasLink project is a 670-km pipeline spanning northern British Columbia. It will carry natural gas across the province to the LNG Canada processing and export facility in Kitimat, B.C.
Construction of the pipeline is 83 per cent complete and TC Energy hopes to complete the project by the end of this year. However, the company warned Wednesday that if construction extends into well into 2024, it could add up to an additional $1.2 billion to the project's cost.
TC Energy - which warned at its investor day in November that it was anticipating a material increase in the cost of the project - said it has run into a host of problems including a shortage of skilled labour; contractor underperformance and disputes; as well as other unexpected events like drought conditions and erosion and sediment control challenges.
While the company said it is pursuing potential recoveries from contractors to offset a portion of the rising costs, it will recognize an impairment to its equity investment in Coastal GasLink in its fourth-quarter 2022 financial results.
TC Energy said its overall 2023 capital expenditure outlook has been revised to approximately $11.5 to $12.0 billion, reflecting the deferral of certain project spending, expected cost-saving initiatives and incremental funding requirements associated with Coastal GasLink.
In an emailed statement, LNG Canada said it continues to monitor Coastal GasLink's cost and schedule developments.
“While we cannot disclose specifics, a commercial agreement is in place that addresses risk allocation,” the statement said.
LNG Canada is a joint venture between Shell plc, Petronas, PetroChina, Mitsubishi and the Korea Gas Corporation. Its Kitimat LNG export facility is more than 70 per cent complete, and the project partners have said they want to deliver its first LNG shipment to global export markets by mid-decade.
The Coastal GasLink pipeline is not the only major energy infrastructure project in Canada to be plagued by cost overruns. Last February, the Crown corporation behind the Trans Mountain pipeline expansion project - which will increase oil transportation capacity from Alberta to the West Coast - announced the new cost of the project was an estimated $21.4 billion, up from an earlier estimate of $12.6 billion.
Trans Mountain Corp. blamed the surging cost projections on the COVID-19 pandemic and the effects of the November 2021 flooding in B.C., as well as project enhancements, increased security costs, route changes to avoid culturally and environmentally sensitive areas, and scheduling pressures related to permitting processes and construction challenges in difficult terrain.
Budget overruns at both pipelines have provided fodder for environmental groups, who believe companies should be investing in green energy instead of traditional fossil fuels.
This report by The Canadian Press was first published Feb. 1, 2023.
CTVNews.ca Top Stories
Why drivers in Eastern Canada could see big gas price spikes, and other Canadians won't
Drivers in Eastern Canada face a big increase in gas prices because of various factors, especially the higher cost of the summer blend, industry analysts say.
How to avoid the trap of becoming 'house poor'
The journey to home ownership can be exciting, but personal finance columnist Christopher Liew warns about the trappings of becoming 'house poor' -- where an overwhelming portion of your income is devoured by housing costs. Liew offers some practical strategies to maintain better financial health while owning a home.
Toxic forever chemicals in drinking water: Is Canada doing enough?
As the United States sets its first national limits on toxic forever chemicals in drinking water, researchers say Canada is lagging when it comes to regulations.
'A living nightmare': Winnipeg woman sentenced following campaign of harassment against man after online date
A Winnipeg woman was sentenced to house arrest after a single date with a man she met online culminated in her harassing him for years, and spurred false allegations which resulted in the innocent man being arrested three times.
Some customers steaming after McDonald's ends free hot drink sticker program
It took years for Vinnie Deluca to collect more than 400 cards worth of free McDonald's McCafe coffee, a collection that now has "zero value" after the company discontinued the program.
Biden scores endorsements from Kennedy family, looking to shore up support against Trump and RFK Jr.
U.S. President Joe Biden will accept endorsements from at least 15 members of the Kennedy political family during a campaign stop in Philadelphia on Thursday as he aims to undermine Donald Trump and marginalize the candidacy of Robert F. Kennedy Jr.
Where did the gold go? Crime expert weighs in on unfolding Pearson airport heist investigation
Almost 7,000 bars of pure gold were stolen from Pearson International Airport exactly one year ago during an elaborate heist, but so far only a tiny fraction of that stolen loot has been found.
When new leaders took over in ancient Maya, they didn't just bury the former royals. They burned their bodies in public
New archeological investigations in Guatemala reveal that the ancient Maya people had a ritual of burning royal human remains as a public display of political regime change.
Party's over: Coyotes play final game as Arizona franchise before move to Salt Lake City
Mullett Arena buzzed like few times in the two years since the Arizona Coyotes moved in, the fans amped for one last desert hurrah.