Canada Pipeline Update -- May 31, 2024

Locator: 48007CANADA.

Road to Canada: blank check for pipelines.
Road to California: blank check for bullet trains.

Link here.

In a landmark move for the Canadian financial markets, Coastal GasLink LP, partially owned by KKR & Co., is set to initiate the largest corporate bond deal in Canada's history. The pipeline project, located in Western Canada, is preparing to issue up to C$4 billion ($2.9 billion) in bonds to refinance its existing construction debt. This unprecedented offering is scheduled for early June, according to sources familiar with the matter.

The Coastal GasLink project, a 416-mile natural gas pipeline, has faced significant challenges since its inception over a decade ago. Regulatory hurdles, political disputes, and labor issues have contributed to the project's escalating costs, which have more than doubled from the original estimate of C$6.6 billion to C$14.5 billion. Despite these obstacles, the pipeline is nearing completion, necessitating the refinancing of its construction credit facility.

The planned bond issuance, even at the lower estimate of C$3 billion, will rank among the top three largest corporate bond deals ever recorded in Canada. The deal is expected to form part of a broader C$9 billion fixed-income financing strategy for the pipeline, highlighting the substantial financial commitment required to bring the project to fruition.

The Coastal GasLink pipeline is a crucial component of Canada's energy infrastructure, transporting natural gas from the Montney shale formation in Western Canada to the LNG Canada terminal on the west coast. At the terminal, the gas will be converted to liquefied natural gas (LNG) for export, primarily targeting Asian markets. Demand from countries such as China and India is anticipated to support Canadian supply despite competitive pressures from Middle Eastern producers.

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TransMountain

Link here.

May 31, 2024 [Reuters]- The Canadian government has guaranteed another C$1 billion ($731 million) in commercial loans for the Trans Mountain pipeline expansion, taking the total government-backed loan facility to C$19 billion, Trans Mountain’s quarterly earnings statement showed on Thursday. TransMountain The expansion project, which has so far cost C$34 billion, nearly triples capacity to ship oil from Alberta to Canada’s Pacific coast to 890,000 barrels per day. It started commercial operations on May 1 after years of delay.

While the oil industry in Canada, the world’s fourth-largest producer, has welcomed expanded access to overseas markets, opponents of the project are critical of the cost to Canadian taxpayers and its environmental impact.

“We’ve basically written a blank cheque to this project,” said Keith Stewart, senior energy strategist at Greenpeace Canada. “This money could have been so much better spent getting off oil and fighting climate change.”

Prime Minister Justin Trudeau’s Liberal government bought Trans Mountain from Kinder Morgan Inc in 2018 to ensure the expansion went ahead but in 2022, as costs soared, said it would no longer finance the project with public money.