Coastal GasLink Pipeline

From Global Energy Monitor
This article is part of the Global Fossil Infrastructure Tracker, a project of Global Energy Monitor.
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Coastal GasLink Pipeline is a proposed natural gas pipeline in Canada.[1]

Location

The pipeline runs from Dawson Creek, British Columbia, to Kitimat, British Columbia.

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Project Details

  • Owner: Alberta Investment Management Company and KKR and Co. Inc have a joint 65% stake, TC Energy (formerly TransCanada) has a 35% stake[2]
  • Current capacity:
  • Proposed capacity: 2,000-3000 Million cubic feet per day
  • Length: 670 kilometers
  • Status: Proposed
  • Financing: Financial close reached in April 2020, a US$224 million loan from Export Development Canada and US$4.33 billion in loans from a syndicate of international commercial banks[3]
  • Start Year:

Background

Coastal GasLink Pipeline Ltd., a subsidiary of TC Energy, is proposing to develop a project to deliver natural gas British Columbia to the LNG Canada Terminal gas liquefaction facility proposed to be developed by Shell Canada Ltd. and its partners near Kitimat, B.C. Investment for the project was to be finalized by 2016 and construction was projected to begin in 2017.[4] However, the project was delayed in July 2016 due to a lack of demand on the global energy market.[5] The project as it stands will include the construction of a 670km-long, 48in-diameter pipeline to provide between two and three billion cubic feet a day (bcf/d) of natural gas that can be expanded to 5bcf/d through the addition of up to seven compressor stations, while a single compressor station will be built initially.[6]

Despite the delay in final investments, in March 2017, it was reported that the province of British Columbia had reached agreements with 17 of the 20 First Nations along the proposed pipeline route of the Coastal GasLink Pipeline Project.[7]

In May of 2019, TC Energy, formerly TransCanada, introduced the subcontractor that will be doing the construction on sections 6 and 7 of the company’s 670 km pipeline to local business leaders at the Smithers District Chamber of Commerce monthly luncheon. Pacific Atlantic Pipeline Construction (PAPC) is a Canadian subsidiary of Bonatti Group, an oil and gas general contractor based in Italy. The company will be building the two sections of the pipeline that run approximately 165 kilometers from south of Burns Lake to south of Hazelton.[8]

In July of 2019, Canada's national energy regulator, the National Energy Board (NEB), ruled that British Columbia rightly has the jurisdiction to handle the environmental assessment, giving local authorities the power over the pipeline's future.[9]

In February of 2020, TC Energy claimed that Coastal GasLink Pipeline Ltd. had cleared 42% of the pipeline's route.[10] This is the first of 8 stages, according to the company.[11]

In May 2020, TC Energy sold a 65% stake in the project to the investment companies AIMCo (Alberta Investment Management Company) and KKR & Co. Inc in an estimated C$600 million deal which was one of the determining factors for international banks to provide the project with loans (see Financing section below). TC Energy has kept a 35% stake in the project and will continue to be responsible for building and operating the pipeline. The private equity purchase by AIMCo and KKR has provoked controversy as it involves the investment of Canadian and South Korean pension fund money into a highly controversial and risky project. AIMCo is an Alberta Crown corporation that invests the pensions of hundreds of thousands of Albertans, including government staff, health-care workers and bus drivers. The company has been developing a reputation for sinking money into oil and gas companies and suffering losses as a result. KKR is an American private equity firm, and its entry into the Coastal GasLink has been made in partnership with South Korea’s state-run National Pension Service, the third-largest pension fund in the world.[2]

Financing

In May 2020 Canada's export credit agency, Export Development Canada (EDC), disclosed that it is providing the project with financing of between CAN$250-500 million.[12] It was subsequently reported in Canadian media that the EDC funding deal was accompanied by a further deal from a syndicate of banks which will be providing the majority of the project's construction costs.[13] This syndicate has been reported to involve 27 banks. The Korea Herald reported that KB Kookmin Bank has agreed to provide a CAN$240 million (US$171 million) loan for the project and also named JPMorgan Chase, Bank of Montreal and Royal Bank of Canada as banks involved in the loan package.[14]

Overall project financing involving debt of US$4.7 billion to fund up to 80% of the project during construction was confirmed by IJGlobal. Alongside Export Development Canada on the deal are commercial banks from Australia, Canada, China, Germany, Japan, Singapore, South Korea and the United States.[3]

Opposition

In 2015, TC Energy rerouted its planned Coastal Gaslink pipeline, moving the path 5 kilometers north to avoid structures erected by the Unist’ot’en along the Morice River; however the pipeline would still cut through the clan’s territory.[15]

The pipeline project has garnered international attention due to protests by the Unist’ot’en (Dark House) of the Wet’suwet’en and their supporters, but by May of 2019 CGL had legal agreements with all of the 20 elected chiefs and councils along the pipeline’s route, thereby undermining local opposition.[16] Following a temporary suspension of construction in early 2020 due to ongoing disputes with Wet'suwet'en indigenous peoples, the pipeline construction work was reported to have restarted as of March 11.[17] Just days later, and in response to the COVID-19 outbreak, it was announced that pipeline construction was being scaled back with the number of construction workers being reduced as a precautionary measure.[18]

Coronavirus Pandemic Impacts, 2019-2020

In March of 2020, the Union of B.C. Indian Chiefs (UBCIC) issued an open letter urging federal and provincial governments to pause pipeline construction during the ongoing Coronavirus pandemic (COVID-19). The letter states, "We urge you to act swiftly to protect the public’s health from the heightened risks of COVID-19 transmission posed by ongoing construction of the Coastal GasLink pipeline project...Most vulnerable to the spread will be frontline health-care workers, project workers, and local Indigenous and non-Indigenous communities forced to shoulder the consequences for any disregard for health and safety." The letter cites concerns over the movement of construction workers into the area, which the leaders say is contrary to what health officials have recommended.[19]

The Action Network has initiated a petition urging government officials, including Prime Minister Justin Trudeau, to force the shutdown of pipeline construction for the duration of the pandemic. The petition is available through The Action Network.[20]

Articles and resources

References

  1. Coastal GasLink Pipeline, TransCanada website, accessed September 2017
  2. 2.0 2.1 Alberta and South Korea’s pensions just bought the Coastal GasLink pipeline: 8 things you need to know, The Narwhal, Jun. 10, 2020
  3. 3.0 3.1 Coastal GasLink Pipeline (670КМ), IJGlobal Transaction Data, accessed June 11, 2020
  4. Coastal GasLink – Pipeline Project Overview, TC Energy, accessed December 2017
  5. 2017 Canadian Natural Gas Pipeline Report, North American Oil & Gas Pipelines, August 21, 2017
  6. Coastal GasLink Pipeline Project, British Columbia, Hydrocarbons-Technology, accessed December 2017
  7. British Columbia secures 90% of First Nations agreements needed for LNG-related pipe projects, Platts, March 27, 2017
  8. Coastal GasLink introduces pipeline construction subcontractor BC Local News, accessed May 2019
  9. Derrick Penner, National Energy Board rejects argument LNG Canada's pipeline should have had federal review The Province, July 26, 2019
  10. TC Energy (14 February 2020). "Construction Update: February 14, 2020" (PDF). CoastalGasLink.com. Retrieved 27 February 2020.
  11. "Pipeline Construction: Stages of Pipeline Construction" (PDF). coastalgaslink.com. Retrieved 27 February 2020.
  12. Individual Transaction Information 2020, Export Development Canada website, May 2, 2020
  13. Coastal GasLink pipeline gets loan of up to $500M from federal agency, The Star, May 4, 2020
  14. KB Kookmin Bank to finance gas pipeline project in Canada, The Korea Herald, May 12, 2020
  15. Native Resistance to Pipeline Development on Unsurrendered Territory, ArcGIS, November 15, 2015
  16. Coastal GasLink introduces pipeline construction subcontractor BC Local News, accessed May 2019
  17. "Construction on the Coastal GasLink Pipeline Picks Up," Pipeline Technology Journal, Mar. 11, 2020.
  18. "Wet’suwet’en hereditary chiefs postpone all-clans meeting," The Globe and Mail, Mar. 17, 2020.
  19. Stephanie Ip, COVID-19: First Nations leaders urge Coastal GasLink pipeline to 'stay home' Vancouver Sun, March 31, 2020
  20. Stop all Construction on Coastal GasLink, Site C and Trans Mountain: risk of COVID 19 The Action Network,accessed April 20, 2020

External resources

The Action Network's COVID-19 Petition