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Coastal GasLink Faces Delay as LNG Canada Disputes Cost Overruns, Missed Deadlines

The completion of the controversial Coastal GasLink pipeline could be delayed if TC Energy can’t resolve an ongoing dispute with LNG Canada over project costs, the Calgary-based company said Thursday.

TC Energy chief executive François Poirier said construction of Coastal GasLink—which TC Energy is building to deliver natural gas from northeastern B.C. to the LNG Canada facility in Kitimat, British Columbia—is nearly 50% complete and making good progress after a delay earlier this year due to COVID-19 public health restrictions, The Canadian Press reports.

But now, the company is in a disagreement with LNG Canada over escalating costs and project scheduling, Poirier said.

“While commercial discussions are ongoing and we remain committed to successfully completing the project, we are nearing a critical stage that requires resolution of the outstanding issues,” he told analysts on a conference call.

LNG Canada selected TC Energy in 2011 to design, build, own, and operate Coastal GasLink. The 670-kilometre pipeline is intended to move 2.1 billion cubic feet per day (bcf/d) of natural gas through unceded Indigenous territory to LNG Canada’s terminal, where it will be liquified for export to global markets.

In an emailed statement, LNG Canada said TC Energy has proposed cost increases and schedule performance that are “well beyond” what the two companies agreed to when LNG Canada made its final investment decision in October 2018, CP says.

“We have been working hard with TC Energy to understand the reasons for the increase in cost and schedule, and we have provided recommendations on improved execution efficiency,” LNG Canada said in its statement. “Our priorities are on a pipeline that is constructed safely and on schedule, under competitive terms, in order to deliver this critical infrastructure.”

Preliminary construction on Coastal GasLink began in 2019, and the project is currently slated to be complete in 2023.

Also on Thursday, TC Energy reported lower net profits in its latest quarter due to the cancellation of the Keystone XL export oil pipeline. The company’s financial results included a C$2-million charge for Keystone, along with a $408-million gain for selling part of its stake in Coastal GasLink.

The company says its net financial hit from the Keystone XL termination was $1.1 billion as of the end of the quarter. It took an after-tax charge of $2.2 billion last quarter. [Which totally explains why TC Energy is claiming $15 billion in damages in its trade complaint against the United States—Ed.]

This report by The Canadian Press was first published July 29, 2021.