TC Energy shifts capital to US ventures while addressing questions on tariffs and pipeline expansion
TC Energy Corp. remains focused on expansion in the United States, as chief executive François Poirier stated during a quarterly earnings call, but he avoided committing to any new major Canadian pipeline projects.
According to Financial Post, Poirier said, “Right now, we see the highest risk-adjusted returns being in the United States. The vast majority of our discretionary capital is going, and we expect that it will continue to go, into the United States.”
The discussion comes amid renewed public interest in major Canadian export pipelines following former US President Donald Trump’s proposal for a 10 percent tariff on Canadian and Mexican energy.
However, TC Energy noted that conditions have changed since it initially proposed the Energy East project.
The company’s Canadian Mainline, which was once underused and considered for crude oil transport as part of Energy East, is now fully contracted.
TC Energy stated that one segment of the Mainline, Line 2, remains unavailable but could be restored depending on market conditions.
Additionally, TC Energy spun off its oil pipeline business last October, forming South Bow Corp.
Addressing inquiries about a national ‘energy corridor,’ Poirier pointed to South Bow, stating, “With respect to what I would call an ‘energy corridor’ from coast to coast to coast—lots of inquiries on the liquid side—I would refer those to our friends and former colleagues at South Bow.”
Despite its cautious stance on new Canadian oil pipeline projects, the company is optimistic about expanding the LNG Canada project.
Poirier highlighted the potential for increasing capacity on the Coastal GasLink pipeline by deploying additional compressor stations, stating, “There is absolutely demand for more LNG export and market opportunity for us to prosecute. We’re very bullish about the prospects for CGL phase two happening.”
TC Energy exceeded analyst expectations by reporting a $1.1bn profit, or $1.05 per share, in the final quarter of 2024.
While its Canadian and US natural gas pipelines showed lower earnings year over year, these declines were offset by gains in its power business and its natural gas operations in Mexico. The weakening peso contributed to the gains, as TC Energy’s revenues there are paid in US dollars.
The company also announced the mechanical completion of its Southeast Gateway pipeline project in Mexico. The offshore natural gas pipeline spans 715 kilometres and came in 13 percent under budget. TC Energy expects the pipeline to be in service by May 1.
TC Energy also faced investor concerns regarding the potential impact of US tariffs on its North American operations, which include pipelines, power generation, and storage assets.
The company reassured stakeholders that its exposure to tariffs is minimal in the short term, as most of its revenue comes from regulated cost-of-service pipeline tolls and take-or-pay contracts.
Poirier acknowledged that prolonged tariffs could influence capital allocation but emphasized the company’s ability to adjust investments based on energy demand across its three operating regions.
“The majority of TC’s discretionary capital spending would go to projects transporting US production to US demand centres so ‘there would be no tariff impacts,’” he said.
According to Reuters, South Bow Corp. began trading on the Toronto Stock Exchange after spinning off from TC Energy in October 2024.
The company operates 4,900 kilometres of oil pipeline infrastructure, including the Keystone pipeline, which transports 622,000 barrels of oil per day from Alberta to the US Midwest and Gulf Coast.
Analysts note that South Bow focuses on maximizing existing operations and returning cash to shareholders. However, they also highlight concerns about its substantial debt load, despite stable revenue from the Keystone pipeline.
