Estimated cost of Coastal GasLink pipeline surges to $14.5-billion
The cost estimate has surged for building the Coastal GasLink pipeline project in northern British Columbia, leaving uncertainty over when the route will be completed.
Calgary-based TC Energy Corp. TRP-T said on Wednesday that it has increased Coastal GasLink’s expected cost to $14.5-billion. That’s up nearly 30 per cent from the previous estimate last year of $11.2-billion and up 134 per cent from the original price in 2018 of $6.2-billion.
TC Energy, which co-owns the B.C. project, said it hopes to complete the natural gas pipeline by the end of this year, but it warned that if the construction activities extend into next year, the price could jump by another $1.2-billion.
Coastal GasLink is facing cost pressures from a shortage of skilled labour, as well as addressing “underperformance” in work done by some subcontractors and dealing with challenges related to mitigating soil erosion and sediment, TC Energy said.
The 670-kilometre pipeline is designed to transport natural gas from northeast B.C. to LNG Canada’s $18-billion export terminal, which is under construction in Kitimat, B.C.
Shares in TC Energy fell $3.22 to close at $54.11 apiece on Wednesday on the Toronto Stock Exchange.
“The market remains concerned regarding additional cost overruns on the project,” Scotia Capital Inc. analyst Robert Hope said in a research note. Given the uncertainty over the final cost and timing for construction completion, he added that the “project isn’t out of the woods yet.”
The goal at Coastal GasLink is to test the pipeline next year and have it ready to supply LNG Canada in 2025, when exports of liquefied natural gas are slated to begin to Asia from Kitimat.
“We are disappointed with the increase in the Coastal GasLink project costs,” TC Energy chief executive officer François Poirier said in a news release. “We continue to be laser-focused on safely completing this critical piece of energy infrastructure at the lowest possible cost, which will enable Canada’s first direct path for LNG exports.”
TC Energy said there is strong interest in its previously disclosed plans to sell $5-billion in various assets, and that divestment program could be expanded.
When LNG Canada’s co-owners approved construction of the Kitimat terminal in the fall of 2018, Prime Minister Justin Trudeau pegged the total investment at $40-billion, including the original estimate of $6.2-billion for Coastal GasLink, but the forecast for pipeline costs has soared by $8.3-billion since then.
Total costs will now be at least $48.3-billion for LNG Canada’s Phase 1, counting the $18-billion Kitimat terminal and various infrastructure that includes the revised estimate of $14.5-billion for the pipeline, as well as annual budgets for drilling in the North Montney region in northeast B.C.
TC Energy concluded the sale of a 65-per-cent stake in the pipeline venture in 2020 to Alberta Investment Management Corp. and KKR & Co. Inc.
TC Energy, which currently owns 35 per cent of Coastal GasLink, announced a deal last year to set aside a 10-per-cent stake for the planned equity sale to as many as 20 elected First Nation councils along the pipeline route. TC Energy now expects to book an impairment charge to its equity interest in the pipeline project when it releases its fourth-quarter results on Feb. 14.
While TC Energy has already told investors that it would take a financial impairment on the project, the severity of the charge could depend on how much of the pipeline’s rising costs might be recouped by the company through imposing higher tolls to its customers, said Clark Williams-Derry, a Seattle-based analyst with the Institute for Energy Economics and Financial Analysis (IEEFA).
Mr. Williams-Derry forecasts that the Coastal GasLink project’s costs for transporting natural gas across British Columbia could end up being double the costs of shipping the fuel from northeast B.C. to the Gulf of Mexico.
A new report by IEEFA said Canadian independent producers could increasingly look to the U.S. Gulf Coast as an attractive market for sending supplies of natural gas instead of relying on plans by LNG proponents in B.C. to export overseas from Canada’s West Coast.
Details yet to be worked out include how the increased pipeline cost will be specifically allocated. “LNG Canada continues to monitor Coastal GasLink’s cost and schedule developments. While we cannot disclose specifics, a commercial agreement is in place that addresses risk allocation,” LNG Canada said in a statement.
The Kitimat terminal is located on the traditional territory of the Haisla Nation. About 190 kilometres of the contentious pipeline route cross the Wet’suwet’en Nation’s traditional territory. Wet’suwet’en hereditary chiefs who oppose Coastal GasLink say they have jurisdiction over that territory.
London-based Shell PLC RYDAF is the largest partner in LNG Canada, with a 40-per-cent stake, followed by Malaysia’s Petronas PNAGF at 25 per cent. The other co-owners are PetroChina PCCYF (15 per cent), Japan’s Mitsubishi Corp. MSBHF (15 per cent) and South Korea’s Kogas (5 per cent).
LNG Canada’s co-owners are considering whether to forge ahead with Phase 2 expansion plans that would double export capacity of natural gas in liquid form.
Five proposals for exports using tankers remain active in B.C., including potential expansions at LNG Canada in Kitimat and FortisBC’s Tilbury LNG domestic plant in Delta. The other three projects are Cedar LNG, Ksi Lisims LNG and Woodfibre LNG.
What every Canadian investor needs to know today – The Globe and Mail
Canada’s main stock index opened higher Wednesday with energy stocks gaining and Dollarama shares advancing on the retailer’s latest earnings. Wall Street’s key indexes also started positive as jitters about the health of the banking sector continued to abate.
At 9:34 a.m. ET, the Toronto Stock Exchange’s S&P/TSX composite index was up 143.74 points, or 0.73 per cent, at 19,801.27.
In the U.S., the Dow Jones Industrial Average rose 172.29 points, or 0.53 per cent, at the open to 32,566.54.
The S&P 500 opened higher by 28.26 points, or 0.71 per cent, at 3,999.53, while the Nasdaq Composite gained 139.51 points, or 1.19 per cent, to 11,855.59 at the opening bell.
“Regardless if it is far too early to have a confident view of the implications of the current banking turmoil for the U.S. economy, nothing matters regarding stocks,” Stephen Innes, managing partner with SPI Asset Management, said in a note.
“After shifting from recession worries in January to sticky inflation fears in February and another sharp pivot contending with banking stress and credit crunch fears in March, the beat goes on as far as stocks are concerned.”
On Wednesday, Michael Barr, the Federal Reserve’s vice chair of supervision, appears again in Washington at a hearing looking at the regulatory response to recent failures in the U.S. regional banking sector. During an appearance before the Senate Banking Committee on Tuesday, Mr. Barr said he was first made aware of the interest rate risk-related issues at Silicon Valley Bank in mid-February, just weeks before its failure, Reuters reported.
In this country, the federal government’s latest budget remains in the headlines.
The Globe reports that slower economic growth and higher public spending are straining Ottawa’s bottom line, as the Liberal government’s 2023 budget announced billions in new spending on clean technology and an expanded national dental care program. The fiscal year that begins April 1 is projected to show a $40.1-billion deficit, compared with a $30.6-billion forecast in the fall update. The government expects the deficit to shrink to $14-billion by 2027-28. It had previously forecast a small surplus for that year.
On the corporate side, Nasdaq-listed shares of Vancouver-based Lululemon jumped more than 14 per cent in morning trading after the athletic attire company forecast annual sales and profit above analysts’ estimates.
Lululemon said it expects fiscal 2023 revenue between US$9.30-billion and US$9.41-billion, above analysts’ average estimate of US$9.14-billion, according to Refinitiv IBES data. The company forecast full-year profit in the range of US$11.50 to US$11.72 per share, compared with analysts’ estimate of US$11.26.
Early Wednesday, Montreal-based retailer Dollarama topped quarterly revenue forecasts when it released its latest results.
The Montreal-based company’s fourth-quarter revenue rose to $1.47-billion, from $1.22-billion a year earlier, beating expectations of $1.39-billion, according to Refinitiv IBES data. The stock was up nearly 0.80 per cent in early trading in Toronto.
Overseas, the pan-European STOXX 600 was up 0.99 per cent by midday. Britain’s FTSE 100 gained 0.90 per cent. Germany’s DAX and France’s CAC 40 were up 0.91 per cent and 1.29 per cent, respectively.
In Asia, Japan’s Nikkei gained 1.33 per cent. Hong Kong’s Hang Seng jumped 2.06 per cent with Alibaba shares boosting tech stocks.
Crude prices were up for a third session, helped by easing worries about the state of global banks and Kurdish supply concerns.
The day range on Brent was US$78.73 to US$79.30 in the early premarket period. The range on West Texas Intermediate was US$73.50 to US$74.
“There’s been a broad improvement in risk appetite at the start of the week thanks to a weekend without drama in the banks,” OANDA senior analyst Craig Erlam said.
“That’s enabled stocks to bounce back and yields to creep higher on stronger economic prospects which, in turn, is lifting crude prices.”
Meanwhile, Reuters reports that crude exports of 450,000 barrels per day from Iraq’s semi-autonomous northern Kurdistan region were halted on Saturday following an arbitration decision that confirmed Baghdad’s consent was needed to ship the oil. On Wednesday, Norwegian oil firm DNO said it had begun shutting down production at its fields in Kurdistan, the news service said.
Later Wednesday morning, traders will get weekly U.S. inventory figures from the U.S. Energy Information Administration. The American Petroleum Institute reported late Tuesday that crude stocks for the week fell by 6.1 million barrels.
In other commodities, gold prices fell as broader risk sentiment improved.
Spot gold was trading 0.6-per-cent lower at US$1,961.80 per ounce by early Wednesday morning, after rising 1 per cent on Tuesday. U.S. gold futures slipped 0.5 per cent to US$1,963.10.
“Risk appetite has improved and yields are rising so naturally, gold is giving back some of the banking panic gains it accumulated over the last few weeks,” Mr. Erlam said.
“Even so, it isn’t trading too far from $2,000, seemingly a major psychological obstacle, and it’s well off its recent lows.”
The Canadian dollar was steady, trading around the mid-73-US-cent mark, as risk sentiment improved and crude prices gained while it’s U.S. counterpart saw a modest advance against a group of world currencies.
The day range on the loonie was 73.43 US cents to 73.60 US cents ahead of the North American open. The Canadian dollar is up about 1 per cent over the last five days and steady over the past month.
“The CAD went on a mini run higher against the USD yesterday and is holding those gains this morning,” Shaun Osborne, chief FX strategist with Scotiabank, said.
“The move up in the CAD is pressuring CAD short positioning that has accumulated quickly in the past few weeks as investors focused on a sidelined BoC and (through early Mar) the risk of more aggressive Fed policy tightening. That never materialized, of course, and ensuing developments have pared back Fed expectations considerably.”
There were no major Canadian economic releases due Wednesday. Bank of Canada Deputy Governor Toni Gravelle is scheduled to speak in Montreal on market liquidity measures undertaken during COVID-19.
On world markets, the U.S. dollar index, which measures the greenback against a basket of currencies, gained 0.15 per cent to 102.64 after falling in the last two sessions. The index is down about 2 per cent for the month so far, according to figures from Reuters.
The euro was down 0.1 per cent on the day at US$1.0834 and Britain’s pound slid slightly to hit US$1.2316, just off the previous day’s near two-month intraday high of US$1.2348.
In bonds, the yield on the U.S. 10-year note was down slightly at 3.543 per cent in the predawn period.
More business news
UBS Group AG has rehired Sergio Ermotti as CEO to steer its massive takeover of neighbour Credit Suisse – a surprise move to take advantage of the Swiss banker’s experience rebuilding the bank after the global financial crisis. The trader turned corporate problem fixer faces the tough challenge of laying off thousands of staff, cutting back Credit Suisse’s investment bank and reassuring the world’s wealthy that UBS remains a safe harbour for their cash. “We felt we had a better horse,” said UBS chairman Colm Kelleher of the decision to replace current CEO Ralph Hamers after less than three years in charge. –Reuters
Macy’s Inc on Wednesday said its Chief Executive Officer Jeff Gennette will retire in February 2024, after serving the company for 40 years. –Reuters
(10 a.m. ET) U.S. Fed Vice Chair for Supervision Michael Barr testifies before the House Financial Services Committee.
(10 a.m. ET) U.S. pending home sales for February.
(12:30 p.m. ET) Bank of Canada Deputy Governor Toni Gravelle speaks in Montreal on “The Market Liquidity Measures We Took During COVID”
With Reuters and The Canadian Press
Walmart and Costco in Canada not making food inflation worse, experts say – CTV News
Experts say the Canadian presence of American retail giants such as Walmart and Costco isn’t likely to blame for rising grocery prices.
That’s despite Canadian grocery chain executives having pushed for MPs to question those retailers as part of their study on food inflation.
University of Toronto economist Ambarish Chandra called ongoing hearings before a parliamentary committee studying the issue, “performative,” saying all retailers seek to maximize profits despite their stated efforts to minimize price hikes.
“It’s easy to call on the foreign companies and make them explain why they’re fleecing hardworking Canadians,” said Chandra.
“It’s not as though American grocers are taking advantage of Canadians and Canadian grocers aren’t. The grocers are going to charge what they can get away with, what the market will bear.”
His remarks come as Canadian grocers and consumersare under pressure as food prices continue to skyrocket despite overall inflation easing in recent months.
Grocery prices were up 10.6 per cent in February compared with a year ago, while overall inflation was 5.2 per cent. The grocery inflation rate was down from an 11.4 per cent year-over-year increase in January.
Walmart Canada president and chief executive Gonzalo Gebara told the parliamentary committee Monday that his company is not trying to profit from food inflation.Instead, he insisted it is striving to maintain a price gap between its products and those sold by its competitors.
Walmart Canada’s gross profit rate for its food business and its total operating profit in dollars declined last year, he added.
Gebara’s testimony followed a highly-anticipated, March 8 committee meeting in which the heads of Metro Inc. and Empire Co., two of Canada’s three biggest grocery chains, questioned why MPs had not called on American retail giants to answer questions for their research into food inflation.
The committee then unanimously agreed to invite the leaders of Walmart and Costco’s Canadian arms to speak.
Pierre Riel, Costco’s senior vice-president and country manager for Canada, is scheduled to appear before the committee on April 17. A Costco spokesperson did not respond to a request for comment on Riel’s upcoming appearance.
Canadian grocers including Loblaw chairman and president Galen Weston told the committee earlier this month that food inflation is not being caused by profit-mongering, insisting their margins on food have remained low.
But Chandra said that framing is merely “window dressing.”
“We’ve seen, frankly, bad behaviour from these grocers over the years, whether it’s price fixing or other sorts of scandalous issues, like co-ordinating on reducing pay for cashiers during the pandemic — all of these things stemmed from the fact that we just don’t have enough competition,” he said.
“We should look into encouraging competition, and one way to do that is to actually have more foreign grocers in the country. So, the presence of Walmart is actually good for Canada in the long run, not bad for it.”
Simon Somogyi, an agribusiness researcher at the University of Guelph, added that Walmart and Costco are larger companies than Canadian grocers, which gives them the ability to source products in greater volumes, ultimately allowing them to sell at lower prices.
“Their inclusion in our retail landscape is important and allows consumers to have a choice of where they want to put their money,” he said.”Typically, their motto is ‘come to us because we sell in bulk, at a typically lower price than our competitors.”‘
He said “any competition that can come into the marketplace is welcomed” in order to help keep costs down.
Factors such as high costs for delivery, packing and labour, along with historically high commodity prices, are still contributing to rising grocery bills, but experts have said they expect food price increases to normalize by the end of 2023.
If the ongoing committee hearings yielded increased transparency surrounding the mechanisms that lead to increased costs for suppliers, Somogyi said it would benefit the public.
“The hearings that we’ve been seeing are really about, from a consumer perspective, why are prices going up? I’d sort of hoped in some ways for far more discussion on how supplier prices are set,” he said.
“The two are linked, but a lot of the theatrics that we’ve seen in this hearing haven’t really got to the bottom of that.”
This report by The Canadian Press was first published March 29, 2023.
Canada eases some rules around foreign homebuyers ban
The federal government announced amendments to the foreign homebuyer ban on Monday that eases some restrictions for non-Canadians, including newcomers to the country.
The Prohibition on the Purchase of Residential Property by Non-Canadians Act was passed by Parliament in June 2022 and came into force on the first day of 2023.
Under that law, non-citizens, non-permanent residents, and foreign commercial enterprises were blocked from purchasing Canadian homes — with some exceptions for international students and temporary residents. Those who violate the ban face a $10,000 fine and may have to sell the offending property.
The amendments will now allow some non-Canadians to purchase residential property in certain circumstances in order to help add to Canada’s housing supply, according to a statement from the ministry of housing.
Effective immediately, work permit holders or those authorized to work in Canada can now purchase a home to live in while working in the country. Work permit holders must have 183 days or more of validity remaining on the permit at the time of the purchase, and cannot purchase more than one residential property, according to the statement.
The ban will also now not apply to vacant land zoned for residential and mixed-use, so non-Canadians can purchase such land with the potential of using it for residential development.
There will also now be an exception to allow non-Canadians, as well as publicly traded entities formed in Canada but controlled by a non-Canadian, to purchase residential property for the purpose of development.
In addition, the government will consider a privately-held corporation or entity to be foreign if a non-Canadian owns up to 10 per cent of its equity, up from three per cent.
“These amendments will allow newcomers to put down roots in Canada through home ownership and businesses to create jobs and build homes by adding to the housing supply in Canadian cities,” Housing Minister Ahmed Hussen said in a statement in CMHC’s release.
“These amendments strike the right balance in ensuring that housing is used to house those living in Canada, rather than a speculative investment by foreign investors.”
Canada has been accepting record numbers of immigrants into the country, and the ban was previously criticized by some experts for not allowing them to purchase homes.
The foreign homebuyers ban was put in place to limit foreign investment in property that potentially could be taking away homes for Canadians, according to Hussen.
However, the policy has been criticized for not being the right approach to tackling housing affordability.
Elton Ash, ReMax executive president for Western Canada, told Global News in January that non-Canadian homeowners don’t make up a significant amount of real estate transactions.
“I can tell you with full confidence, (the ban) will have zero effect on house prices,” he said.
— with files from Global News’ Kathryn Mannie
Inside the Very Tough Business of Trying to Disrupt Media – Vanity Fair
Federal budget 2023: Canada's clean economy tax credit plan – CTV News
Post Politics Now: Biden to press for democratic renewal in speech to global summit – The Washington Post
Silver investment demand jumped 12% in 2019
Iran anticipates renewed protests amid social media shutdown
Search for life on Mars accelerates as new bodies of water found below planet’s surface
Politics16 hours ago
Justin Trudeau has let Beijing deep into Canadian politics
Art19 hours ago
‘Before cancer I was really unhappy’: Tracey Emin on the joy of founding her own art school
Real eState18 hours ago
Cottage sales expected to decline in 2023
Business16 hours ago
Canada eases some rules around foreign homebuyers ban
Art19 hours ago
Emily Fisher Landau, Patron of Contemporary Art, Dies at 102
News14 hours ago
Comedian Joe Avati Set to Bring Down the House on the Canadian Leg of His World Tour this Summer
News8 hours ago
Systemic Racism in Canada Healthcare Sector
Science17 hours ago
Look up: 5 planets will align in Tuesday’s night sky