Despite the dramatic decline of oil prices and the global impact of the coronavirus pandemic, TC Energy Corporation is going ahead with construction of the nearly $8 billion Keystone XL pipeline project.
“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.”
The nearly 1,200-mile pipeline will run from Hardisty, Alberta through Montana and Wyoming and into Steele City, Nebraska, carrying an estimated 830,000 barrels of oil a day. In Nebraska, the line will connect to TC Energy’s existing facilities where the oil will be shipped southward to oil refineries on the Gulf Coast. The company estimates that with pre-construction activities underway, the line could be in 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 announcement brought immediate support from American Petroleum Institute President and CEO Mike Sommers.
“Today’s announcement from TC Energy that they are moving forward with the construction of the Keystone XL pipeline is important and represents significant progress for North American energy security,” he said.
“This project has been studied for well over a decade, and will bring billions of dollars in investment to the American economy as well as thousands of high-paying jobs. Even during this challenging and unprecedented time, our industry is leading the way and showing just why we are and will continue to be the backbone of our economy.”
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.
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.
Source: TC Energy
