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TC Energy eyes options to ramp up Keystone volumes despite pressure limit

TransCanada president and CEO Russ Girling addresses the company's annual meeting after shareholders approved a name change to TC Energy in Calgary, Friday, May 3, 2019. TC Energy Corp. says it expects its dividend to grow at an annual rate of eight to 10 per cent through 2021, but then growth in its payment to shareholders is expected to slow. THE CANADIAN PRESS/Jeff McIntosh
November 19, 2019 - 9:59 AM

CALGARY - TC Energy Corp. is looking at "optimizing" unaffected parts of its Keystone pipeline and will use drag reducing agents to ease volume losses following a spill in North Dakota, Paul Miller, vice-president of liquids pipelines, reported Tuesday.

The pipeline was restarted at lower pressure and capacity last week after being offline for almost two weeks following a leak that spilled an estimated 1.4 million litres or 9,100 barrels of oil in a field near Edinburg, N.D.

It's unknown when U.S. regulators will allow it to return to full pressure, said Miller, speaking at the energy transport and power company's investor day. He said it will take about two months for an independent lab to complete its analysis of the damaged section of pipe that was removed and replaced.

"We'll get the results of that root cause failure analysis and see what it means ... from modifying if necessary both our maintenance and integrity program and that will set the stage for us to resume the full pressure and ramp up the volumes at that point," he said.

The pipeline which runs from Alberta to the U.S. Gulf Coast was operating at about 590,000 barrels per day when the leak was discovered, said Miller.

He said the 20 per cent reduction in pressure imposed by the U.S. regulator applies only to sections on either side of the leak, not to the entire Keystone pipeline, but didn't give current volumes.

If the pipeline is required by regulators to improve its integrity program to return to full pressure, those costs would be considered maintenance and would be passed on to shippers through variable tolls, Miller said.

TC Energy is the developer of the 830,000-bpd Keystone XL pipeline expansion which is awaiting final permits before being sanctioned for construction.

Miller declined to give an updated cost estimate for the project and said timelines remain unclear.

Court challenges and taller regulatory hurdles that are delaying or preventing new energy pipelines mean TC Energy will focus on organic "in-corridor growth" in its extensive network going forward, CEO Russ Girling said on the investor day webcast.

"That is our competitive advantage," he said. "It's an enviable position to have in a world where demand continues to grow but it is extremely difficult to site new infrastructure."

He said the company formerly known as TransCanada Corp. has identified over $50 billion of organic growth opportunities, including $30 billion of commercially secured projects.

Those incremental projects will include expansions to its western Canadian natural gas system, which gathers about 75 per cent of production, as well as the Canadian Mainline that transports that gas to Eastern Canada and the U.S. Northwest.

New liquefied natural gas projects in the U.S. and growing interest in LNG export terminals in Mexico represent other opportunities to expand TC Energy's natural gas pipeline networks, investors heard.

The company is forecasting earnings before interest, taxes, depreciation and amortization or EBITDA will exceed $10 billion in 2022, up 16 per cent from $8.6 billion in 2018.

It expects its dividend to grow at an annual rate of eight to 10 per cent through 2021, and then slow to an average annual rate of five to seven per cent.

This report by The Canadian Press was first published Nov. 19, 2019.

Companies in this story: (TSX:TRP)

News from © The Canadian Press, 2019
The Canadian Press

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