Calgary-based pipeline operator TC Energy is selling a 40% stake in its natural gas pipeline systems for $3.9 billion as part of its efforts to reduce debt.

TC Energy Corporation (TRP) has agreed to sell a 40% stake in its Columbia Gas Transmission and Columbia Gulf Transmission systems to Global Infrastructure Partners (GIP). This move will help TC Energy reduce its debt and establish a valuable long-term partnership with GIP, a prominent infrastructure investor.

Background of the Deal

The decision by TC Energy Corporation (TRP) to sell a portion of its ownership in the Columbia Gas and Columbia Gulf pipelines is driven by its long-term plan to raise capital and decrease its debt burden. The decision aligns with TRP's strategy of pursuing new investment opportunities and bolstering its position in the ever-changing energy market.

Deal Details

• TRP sells a 40% stake in Columbia Gas Transmission and Columbia Gulf Transmission systems to GIP.
• GIP pays C$5.2 billion (US$3.9 billion) in cash for the 40% stake.
• Part of TRP's plan to raise capital, reduce debt, and focus on new investment opportunities in the energy market.
• Expected Closing Date: Fourth quarter of 2023.
• GIP's Responsibilities: GIP will handle 40% of the annual maintenance, modernization, and growth capital investments (around C$1.3 billion annually) for 3 years.
• TRP will continue to operate both pipeline systems in the joint venture, prioritizing safe operations and service reliability.
• Future Projects: Proceeds from the sale will fund investments, including the Coastal GasLink pipeline.
• Closure Date: Agreement with GIP expected to close by November, finalizing the partnership.

Strengthening the North American Natural Gas Network

The Columbia Gas and Columbia Gulf pipelines create an extensive natural gas infrastructure spanning over 15,000 miles across North America. They play a crucial role in meeting a significant portion of the daily U.S. natural gas demand and contribute around 20% of the country's liquefied natural gas export supply. Additionally, these pipelines are instrumental in facilitating the transition towards lower-emission energy sources. Their operations are guided by robust long-term natural gas fundamentals and a rate-regulated commercial framework.

Energy Transition

TC Energy and GIP are committed to supporting the move to sustainable energy sources as the global energy landscape evolves. They aim to promote essential natural gas projects, recognizing the ongoing significance of natural gas in this transition. The Columbia Gas and Columbia Gulf pipelines will play a vital role in connecting the largest and most cost-effective natural gas basin to key demand centers and export markets, contributing to cleaner energy solutions.

Future Agenda

With the funds from the sale, TC Energy can focus on important projects like the Coastal GasLink pipeline, which is crucial for Canada's energy infrastructure. By prioritizing debt reduction and smart capital allocation, TC Energy aims to achieve sustainable growth and maintain its leadership in the energy sector.

The agreement between TC Energy and GIP is a significant milestone in the energy industry. It opens up new investment possibilities while ensuring top-notch operations for their core assets. The joint venture aligns with the broader goal of supporting the energy transition and highlights the enduring importance of natural gas in shaping a sustainable energy future.