TC Vitality Corp. has once more revised upward the anticipated price of the Coastal GasLink (CGL) pure gasoline pipeline in Western Canada, citing challenges on a number of fronts.

TC now expects the undertaking to price C$14.5 ($10.9 billion), up from C$11.2 billion ($8.4 billion) forecast in its third quarter 2022 earnings report.

“The undertaking continues to face materials price pressures that embrace difficult circumstances within the Western Canadian labor market,” administration mentioned in an replace on Feb. 1.

TC additionally cited expert labor shortages, contractor underperformance and disputes, in addition to surprising occasions together with drought circumstances, erosion and sediment management challenges.

The roughly 416-mile, 2.1 Bcf/d pipeline can be used to attach gasoline provide from the Western Canadian Sedimentary Basin (WCSB) with the LNG Canada terminal beneath development in Kitimat, British Columbia (BC).

Liquefied pure gasoline exports would supply an outlet for WCSB gasoline, which regularly fetches discounted pricing when delivered in-basin due to considerable provide and an absence of pipeline capability to extra profitable markets.

“We’re disenchanted with the rise within the Coastal GasLink Challenge prices,” mentioned CEO François Poirier. “We proceed to be laser-focused on safely finishing this vital piece of vitality infrastructure on the lowest-possible price, which can allow Canada’s first direct path for LNG exports.”

He added, “The undertaking will present substantive advantages for Indigenous and native communities throughout the undertaking route, our prospects, the Western Canadian Sedimentary Basin, in addition to enjoying an important function in enabling world vitality safety and emissions discount contributing to world local weather objectives.”

TC is focusing on mechanical completion of CGL by the tip of this yr, “with commissioning and clean-up work persevering with into 2024 and 2025,” administration mentioned.

A complete evaluation of dangers associated to the undertaking’s price and schedule “additionally thought of the potential affect of an extension of development nicely into 2024,” the Calgary-based midstream large mentioned. “In that occasion, prices would enhance additional by as much as $1.2 billion. 

“As a result of enhance within the anticipated price of the undertaking and the extra funding required,” TC mentioned its fairness funding in Coastal GasLink would come with an impairment in 4Q2022 outcomes. The fourth-quarter earnings name is scheduled for Feb. 14.

Development of CGL is about 83% full, TC mentioned. The whole route has been cleared, grading is greater than 94% full and greater than 485 km (301 miles) of the pipeline “has been backfilled with restoration actions underway in lots of areas.”

The Wilde Lake compressor station at Groundbirch, BC, has begun commissioning work with the introduction of pure gasoline anticipated in March, “representing one other vital milestone in reaching our focused mechanical completion later this yr,” based on TC.

Coastal Gaslink isn’t the one pipeline producing surprising prices for TC. In a Feb. 10 replace, administration mentioned that repairs and cleanup of an oil leak on the Keystone Pipeline in Kansas late final yr are projected to price not less than $480 million.

TC’s general 2023 capital spending funds now stands at C$11.5-12 billion ($8.6-9 billion). The funds displays “the deferral of sure undertaking spending, anticipated cost-saving initiatives and incremental funding necessities related to Coastal GasLink,” the corporate mentioned.

In an effort to streamline its portfolio, TC is focusing on greater than C$5 billion ($3.75 billion) of asset divestitures this yr. “We anticipate a mix of sturdy market curiosity and compelling valuations will help upsizing this system to totally fund our industry-leading secured capital program and obtain our deleveraging goal,” the corporate mentioned.

Poirier added, “Our strategic priorities for 2023 stay unchanged. Our focus is on protected undertaking execution and operational excellence, strengthening our steadiness sheet and monetary flexibility, enhancing returns on our property and advancing our decarbonization and low-carbon alternatives.”