TransCanada Corp. has hired RBC Capital Markets Inc. to manage the planned sale of a majority stake in Coastal GasLink, a $6.2-billion pipeline project that has been the target of protests led by a group of hereditary chiefs in British Columbia.
Calgary-based TransCanada, which wholly owns Coastal GasLink mostly through CGL LP, has been facing opposition to the natural gas pipeline from key Wet’suwet’en hereditary chiefs and an array of environmentalists.
“Third-party joint venture partners could acquire up to 75 per cent of CGL LP interests," Coastal GasLink said in a filing dated Jan. 25 to the National Energy Board. Referring to TransCanada as TCC, the filing noted that “TCC has consulted with RBC Capital Markets as advisers for this sale.”
The NEB is poised to examine an application from Mike Sawyer, an environmentalist from Smithers, B.C., who argues that Coastal GasLink needs federal approval. The natural gas pipeline received regulatory approval in 2014 from the B.C. Environmental Assessment Office to proceed with construction plans.
As part of its 16-page NEB submission, Coastal GasLink outlined the outlook for its ownership structure: “Assuming a transaction proceeds, one or more arm’s-length third parties will hold the majority of the equity.”
TransCanada declined on Monday to explain its motivation, but the move aligns with the company’s shifting focus away from Canada and the possibility that First Nations could buy into the pipeline project and help overcome construction delays.
Coastal GasLink said there is strong support from elected Indigenous groups for the 670-kilometre pipeline route from northeast B.C. to a West Coast terminal, which would export liquefied natural gas to Asian markets. The plant in Kitimat, B.C., will be built by LNG Canada, the consortium led by Royal Dutch Shell PLC.
“Project agreements in support of Coastal GasLink have been signed with all 20 elected band councils along the route,” Coastal GasLink told the NEB. “$620-million in contracts have been awarded to Indigenous communities, and CGL anticipates further opportunities for Indigenous and local businesses valued at approximately $400-million. Payment under these contracts is dependent upon the continuation of construction."
Crystal Smith, chief councillor of the Haisla Nation, said her elected band is interested in becoming an equity co-owner. “Any advancement that we could make to have a social impact on our communities is possible,” said Ms. Smith, who believes that Coastal GasLink’s economic spinoffs would help reduce poverty at the Haisla’s Kitamaat Village and other Indigenous communities along the pipeline route.
She said the First Nations LNG Alliance, headed by Karen Ogen-Toews, is well positioned to help co-ordinate the participation of elected bands hoping to buy a piece of Coastal GasLink. Ms. Ogen-Toews is the former elected chief councillor of the Wet’suwet’en First Nation (formerly known as the Broman Lake Indian Band), which is one of five elected Wet’suwet’en Nation bands along the route that support Coastal GasLink.
Bill Gallagher, a lawyer who examines conflicts between First Nations and energy developers, said the Unist’ot’en protest camp led by five hereditary chiefs has become the latest standoff to signify Canada’s inability to forge ahead with resource projects. Unist’ot’en is affiliated with Dark House, one of 13 hereditary house groups belonging to the Wet’suwet’en Nation.
“Elected bands will probably want somewhere totalling a 10-per-cent stake as an entry level, and being native co-owners would give a good housekeeping seal of approval from them,” Mr. Gallagher said.
He pointed out that TransCanada recently announced plans to change its name to TC Energy, reflecting how the company has been shifting its focus over the years beyond Canada and into the United States and Mexico. “There’s gridlock in Canada’s energy proposals, and TransCanada seems to want to limit its exposure to Coastal GasLink. You are seeing TransCanada rebranding itself and dropping Canada out of its name,” Mr. Gallagher said.
TransCanada’s plans to sell off a large portion of Coastal GasLink follows the decision last year by Kinder Morgan Canada Inc. to exit the Trans Mountain oil pipeline project, after years of failed or stalled energy proposals in Canada. The federal government bought the Trans Mountain oil line and also the terminal in the Port of Vancouver, and inherited the plans for expanding the pipeline from Alberta to the West Coast.
TransCanada spokesman Terry Cunha said on Monday that the company doesn’t have anything to add to the NEB filing. “Any discussions with interested parties are confidential,” he said in a statement.
Donald Marchand, TransCanada’s chief financial officer, briefly raised the possibility of a transaction involving Coastal GasLink during an 85-minute conference call with industry analysts in November. He estimated that TransCanada could be left holding between 25 per cent and 49 per cent of Coastal GasLink. “The amount of money looking for contracted infrastructure assets is substantial,” Mr. Marchand said.
Brent Jang