Noah Zivitz

Managing Editor, BNN Bloomberg

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The cost estimate for the Coastal GasLink pipeline —which will feed a massive liquefied natural gas project in British Columbia — has nearly doubled, one of its proponents announced Thursday morning.
 
TC Energy Corp. said it resolved a longstanding dispute with LNG Canada about the 670-kilometre pipeline, which will ship natural gas from the Dawson Creek area in northeastern B.C. to an export facility in Kitimat. The two sides had been at odds about cost overruns, and TC said they had settled on a new cost estimate of $11.2 billion, up from $6.6 billion.
 
"The agreements resolve uncertainty over specific and anticipated costs, mitigate project funding and execution risks and allow us to continue the safe and timely execution of the project. We continue to believe the project remains economically viable and subject to a final investment decision, we anticipate a potential second phase of Coastal GasLink could enhance TC Energy's project returns," said TC Energy President and Chief Executive François Poirier in a press release.
 
In the release, TC Energy said the new cost estimate reflects the increased scope of the project, as well as challenges associated with weather and COVID-19. As a result of the new cost, TC said it will contribute an additional $1.9 billion to the project, which will allow it to maintain its ownership stake of 35 per cent. It added that project-level credit facilities are being hiked by $1.6 billion to $8.4 billion.
 
“This positive step allows both companies to progress forward with a renewed focus on delivering the pipeline within the revised cost estimate, and to support LNG Canada’s first LNG cargo by the middle of this decade,” said an LNG Canada spokesperson via email.  
 
Coastal GasLink dates back to 2012, when TC Energy (then known as TransCanada) was chosen by LNG Canada to build, own and operate the pipeline. It became a flashpoint for protests amid a groundswell of opposition to new pipeline development across North America, while TC has touted its benefits, including upward of 2,500 jobs during construction and an estimated $42 million in annual local spending once the pipeline is operational, which is anticipated by the end of next year. Earlier this year, it also announced option agreements that would allow Indigenous groups along the project corridor to purchase a 10 per cent stake in the pipeline.
 
TC Energy added Thursday that Coastal GasLink is 70 per cent complete, and on track to be in service by the end of next year.