With oil and gas moguls looking to the future and succumbing to changing times, Canada’s TC Energy plans to do its part in reducing the carbon footprint. According to Reuters, a senior company employee indicated its intention to utilize renewable energy to run its pipeline network.
While the company generated nearly 14 million tons of carbon dioxide from its pipelines in 2019, TC instituted a study to measure exactly how many tons of CO2 it would conserve by converting from natural gas wind and solar power operation of its network of pipelines.
“We started just with our liquids pipeline, and it gives us really a lot of confidence that we’ll be able to pivot quickly to our natural gas pipeline business both in the U.S. and in Canada,” Corey Hessen, President of Power and Storage at TC Energy, told Reuters.
Canada Ranks Number One
As energy companies across the globe attempt to reduce emissions, Canada’s oil and gas market leads as the country’s largest emitting player. As a result, Canada pledged to slash emissions approximately 45% from 2005 levels by that popular target year 2030.
Additional methods will be instituted to meet emission reduction goals. With carbon dioxide prices hovering around $32 a ton, a hike to $136.50 looms by 2030. The government would harness this rate in targeting TC and other designated polluters for their emissions.
TC’s Path
TC captured $54.9 million in expenses due to current carbon pricing programs, which the company identified as increasing from previous years. As a result, TC foresees that the majority of its assets encompassing Canada, the United States, and Mexico will come under fire from regulations mandating carbon emissions.
“It’s in their best interest to green their portfolio and start this strategy now,” said Kevin Birn, IHS Markit Analyst. “The world is going to get more aggressive on climate policies, and that means carbon is going to be a cost.”
TC officials appear to be embracing a new green course of action. The company’s Chief Executive, Francois Poirier, hopes for company growth and diversification simultaneously while decreasing emissions. Mirroring the same sentiment, Hessen stated his power and storage team’s main objective is to secure renewable energy to power the company’s pipelines across the United States and Canada.
Revamping the Old or Building New
Soliciting assistance, TC called upon renewable energy development companies for data on 620 megawatts of wind-powered electricity to power a portion of its Keystone pipeline. As a result, the companies interested provided responses for 14 gigawatts of wind, surpassing TC’s needs by 20 times.
Hessen estimated five to seven GW needed to power the U.S. and Canadian pipeline network as a whole. This finds a comparison with the U.S. Energy Information Administration’s statistic of 118 GW of total installed wind power capacity in the United States. BMO Capital Markets evaluated that 620 megawatts of wind power could come with a $1 billion cost in capital investment. Hessen, however, declined to reveal the renewable energy investment costs. Still, some shareholders revealed a preference for the company to divert expenditures toward new pipelines and, in return, send cash to investors.
“Is it as good (a use of capital) as investing in pipelines, acquiring assets, or buying back shares? I suspect probably not,” said Martin Cobb, Senior Vice President at Lorne Steinberg Wealth Management, a TC stock owner.
TC knows all too well the challenge in building new pipelines, which include environmental opposition and governmental reach. The company currently seeks $15 billion in compensation from the U.S. federal government due to the White House revoking a permit for its $9 billion Keystone XL pipeline project in early 2021. After a 10-year delay, TC canceled the project this past June.
A New Look
While the debacle of the Keystone XL Pipeline continues to linger, some TC investors embrace interest directed at other business ventures. However, natural gas pipelines comprise 75% of the company’s revenue and remain its majority revenue stream. The division will continue to encompass most of the company’s secured capital program through 2024.
Accounting for five percent of TC’s asset value, the power and storage unit serves as a 48.4% stake in the largest nuclear power station located in Canada. As a result, TC will allocate 13% of secured capital spending into the Bruce Power nuclear plant.
New revenue may result from proposed development of two hydro-powered storage units in Ontario and Alberta. Electricity would be produced from pumping water between reservoirs at varying elevations. Should the projects come to fruition, they would be the first of their kind in Canada since the 1950s.
TC partnered with WindRiver Power Corp in the 75-MW Canyon Creek project in Alberta. Kipp Horton, CEO of WindRiver, indicated a decision on the final investment should surface this summer.
“This is an opportunity with a new chief executive to say this is the new TC Energy. They’re still going to be transporting fossil fuels but are trying to transition to a greener business,” said Brett Girard, Portfolio Manager at Liberty International Investment Management, a shareholder of TC.
Nick Vaccaro is a freelance writer and photographer. Besides providing technical writing services, he is an HSE consultant in the oil and gas industry with eight years of experience. He also contributes to Louisiana Sportsman Magazine and follows and photographs American Kennel Club field and herding trials. Nick has a BA in Photojournalism from Loyola University and resides in the New Orleans area. 210-240-7188 [email protected]
