Finance

TC Energy agrees to sell 65 percent interest in Coastal GasLink pipeline project to KKR and AIMCo

by Charlie Smith on December 26th, 2019 at 4:06 PM
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      A pipeline that will deliver fracked gas to B.C.'s largest private-sector infrastructure investment will get two new shareholders.

      Calgary-based TC Energy (formerly TransCanada Pipelines) announced today that it will sell a 65 percent share in the Coastal GasLink project to New York-based KKR and the Alberta Investment Management Corporation.

      AIMCo, which has $108.2 billion in assets, is acting on behalf of some of the 31 pension, endowment, and government funds that it manages.

      As of September 30, KKR has US$208 billion assets under management and US$153 billion in fee-paying assets under management.

      The deal is expected to close in the first half of 2020, providing TC Energy with a $600-million after-tax gain.

      The 670-kilometre Coastal GasLink pipeline is part of a $40-billion project that includes the LNG Canada plant near Kitimat.

      It's been approved by the federal and provincial governments and 20 elected band councils along the route.

      However, it's opposed by Wet'suwet'en hereditary chiefs, who say that elected band councils only have jurisdiction over reserves created under the Indian Act and not over traditional unceded territories.

      Today's announcement came less than a week after the Guardian reported that the RCMP was willing to shoot Indigenous protesters when it enforced a B.C. Supreme Court injunction on January 7.

      Heavily armed Mounties arrested 14 protesters on that day as a result of the injunction, which was obtained by Coastal GasLink.

      The RCMP later described the Guardian story as "inflammatory".

      A spokesperson for the Gidimt'en clan, on the other hand, slammed the Mounties for using terms like "lethal overwatch" and "sterilize the site" in connection with a peaceful checkpoint it had set up.

      Coastal GasLink obtained an injunction earlier this year against Freda Huson (right) and others who've claim that the company is trespassing on unceded Wet'suwet'en territory.
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      Construction underway this month

      Earlier this month, the first segments of pipes arrived in the Kitimat and Chetwynd areas, according to a company newsletter. In total, about 390,000 tonnes of pipe will be required.

      This construction update revealed that more than 1,100 workers were at different sites and 24 percent of the route has been cleared.

      LNG Canada has insisted that it's designed the lowest carbon-emitting plant of its kind in the world, but that hasn't mollified industry critics.

      After the second phase is built, LNG Canada has claimed that it would release four megatonnes per year of carbon dioxide equivalents per year into the atmosphere.

      The Pembina Institute, on the other hand, has suggested that after the second phase is constructed, it could emit 8.6 megatonnes per year by 2030.

      B.C.'s legislated carbon budget by that year will be 40 megatonnes, meaning this one project would account for 21.5 percent, based on the Pembina Institute's figures.

      Marc Lee of the Canadian Centre for Policy Alternatives has written that when all emissions are taken into account including further up the gas-supply chain, they would rise to between nine and 12 megatonnes per year after the second phase is completed.

      LNG Canada has claimed that its fuel will be a substitute for dirtier fuels, like coal, in Asian markets, thereby reducing the world's climate footprint.

      Lee, on the other hand, has characterized this as a "big lie".

      "Extracting unconventional gas supplies, which constitute the majority of Canadian gas production, requires drilling down a couple kilometers below the earth, and then horizontal drilling to frack gas trapped in rock using a mix of water and chemicals," he wrote. "Once surfaced that gas must be piped to processing plants, requiring more energy, where impurities are stripped out. Gas must then be pipelined to the coast to be liquefied before it can be put on a tanker for export to Asia."

      Moreover, he claimed that small methane leaks in the supply chain wipe out any advantage that might remain in comparison to coal.

      Lee isn't alone in his skepticism about fracked gas being used to address climate change.

      Stanford University professor of civil and environmental engineering Mark Z. Jacobson highlighted a similar sentiment expressed in a recent article about methane leaks from an ExxonMobil fracking site.

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