• Natural Gas News

    Canada’s TC Energy mum on discussions with CGL


Cost and scheduling dispute could impact future work on LNG Canada feedgas pipeline [Image credit: TC Energy]

by: Dale Lunan

Posted in:

NGW News Alert, Natural Gas & LNG News, Americas, Liquefied Natural Gas (LNG), Top Stories, Americas, Premium, Editorial, Corporate, Infrastructure, Pipelines, News By Country, Canada

Canada’s TC Energy mum on discussions with CGL

Canada’s TC Energy, which is building the C$6.6bn (US$4.7bn) Coastal GasLink pipeline that will deliver feedgas to the LNG Canada terminal on BC’s northern coast, said July 29 discussions with LNG Canada to iron out cost and scheduling disputes are ongoing but remain confidential.

Tracy Robinson, TC Energy’s executive vice president and president of CGL, confirmed during the company’s Q2 conference call that there is a disagreement with LNG Canada with respect to the alignment of the pipeline project’s costs and schedule.

“We’ve been in discussions for some time now and those discussions do continue,” she said. “They are confidential…[and] because they are confidential, we are unable to share any details at this time.”

Robinson did say, however, that if a resolution isn’t achieved, “there will be some implications” to continuing construction activities. In its Q2 news release, TC Energy said CGL “may be required to suspend certain key construction activities but would continue with work required for safety reasons and compliance with regulatory requirements.

“It’s an important project,” Robinson said. “We’re in full execution now, we have more than 5,000 people working in the corridor, execution is going well, we have a strong safety record, we do want to continue construction. We do remain hopeful that we will have a fair and reasonable outcome, and at that time we’ll be able to share a few more of the details.”

Between December 2020 and April 2021, health orders in BC to deal with Covid-19 limited work on CGL only to “critical” construction activities, including major erosion and sediment control work during the winter period.

“As a result of scope changes, permit delays and the impacts from Covid-19, including the provincial health order, we continue to expect project costs to increase significantly along with a delay to project completion compared to the original project cost and schedule,” the company said. “If a resolution is not reached in the near term, Coastal GasLink may be required to suspend certain key construction activities. 

LNG Canada raised the dispute with CGL in its latest project update, and in a statement emailed to NGW July 29 said it is committed to reaching its first cargo by the middle of this decade, a goal which requires the timely completion of the CGL conduit, which will deliver 2.1bn ft3/day of feedgas from northeast BC.

When LNG Canada took a final investment decision (FID) on the project in October 2018, TC Energy made commitments to build the pipeline, not only to the consortium’s five partners, but also to local communities, indigenous groups and the governments of Canada, BC and those of its Asian participants, the statement said. “We remain concerned with TC Energy’s proposed cost increases and schedule performance on the CGL pipeline, which are well beyond what was agreed to at the October 2018 final investment decision on the LNG Canada project.”

LNG Canada has 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,” it said. Together with our joint venture participants, we are working towards a commercial solution with respect to how increased costs are addressed moving forward.”