Calgary-based TC Energy, the Canadian energy company behind the failed Keystone XL pipeline project, has announced that it is spinning off its oil transportation business to shift its focus to shipping natural gas. The decision comes after TC Energy was forced to abandon plans for the $8 billion Keystone XL pipeline when President Joe Biden revoked a necessary permit.
The company’s strategic review has led to the planned transaction, which will result in a gas-focused business that is better positioned to meet the growing demand for reliable and lower-carbon energy. François Poirier, TC Energy’s chief executive, stated that this separation would allow both companies to execute on distinct opportunities and unlock shareholder value.
TC Energy, formerly known as TransCanada, gained significant attention in the US and Canada due to the proposed Keystone XL project. However, the pipeline project faced political hurdles and was ultimately blocked by former President Barack Obama in 2015. The project was later revived by Donald Trump through an executive order, only to be revoked by President Biden following his campaign promise.
After the spin-off, TC Energy will continue to operate one of North America’s largest natural gas infrastructure networks, spanning approximately 94,000 kilometers. This network delivers around 30% of the gas exported from US terminals as liquefied natural gas. TC Energy will also supply Canada’s first LNG terminal, set to be completed in 2025, and will retain its power generation business.
Environmental opposition to pipeline construction in the US has been increasing in recent years as activists aim to block infrastructure expansion related to fossil fuels. Tied to the announcement, the US Supreme Court approved the Mountain Valley natural gas pipeline project, which had faced legal challenges.
The newly spun-off oil-focused company, which will also be headquartered in Calgary, will operate 4,900 kilometers of crude pipeline infrastructure across the US and Canada, including the existing Keystone system. TC Energy shareholders will maintain their stake in the company and receive shares in the new entity. The completion of this transaction is subject to shareholder approval and is expected to be finalized by the end of 2024.
