KKR and Alberta Investment Management Corp. agreed to become majority stakeholders in TC Energy Corp.’s 2.1 Bcf/d Coastal GasLink Pipeline Project now underway, which is to serve anchor customer LNG Canada in British Columbia.
The estimated C$6.6 billion pipeline and associated facilities would traverse 670 kilometers (416 miles), connecting Western Canadian Sedimentary Basin natural gas supply from the Dawson Creek area to the Royal Dutch Shell plc-led liquefied natural gas (LNG) export project under construction in Kitimat.
“We are excited to partner with TC Energy, a world class infrastructure developer, on this critical project,” said KKR’s Brandon Freiman, head of North American Infrastructure. “Coastal GasLink represents our third investment in infrastructure supporting Canada’s natural gas industry.
“We believe the export of Canadian natural gas to global markets will deliver significant benefits for the Canadian economy and local communities in Western Canada, and enable meaningful progress toward reducing global emissions.”
Coastal GasLink has all required permits in hand, and construction has begun. The project is backed by 25-year transportation service agreements with LNG Canada owners that, in addition to Shell, include prospective Asia-Pacific import partners Korea Gas Corp., PetroChina Corp. and Mitsubishi Corp.
Shell, which holds a 40% stake in LNG Canada, expects exports to begin shipping to Tokyo Bay by the mid-2020s. Initially, the project would consist of two liquefaction trains that together would provide 14 million metric tons/year (mmty) of LNG. There also is an option to expand to four trains.
By displacing coal and diesel-fueled generation with natural gas, LNG Canada expects to reduce global greenhouse gas emissions by up to 60-90 mmty, equivalent to 20-40 coal plants being shut down.
KKR is making the investment primarily through a separately managed infrastructure account in partnership with the National Pension Service of Korea, a public pension fund in South Korea.
HSBC Securities (Canada) Inc. and TD Securities Inc. are serving as KKR’s financial advisers, and Osler, Hoskin & Harcourt LLP is acting as legal counsel.