KKR to acquire stake in Canada’s Coastal GasLink pipeline project

Global investment firm KKR, along with Alberta Investment Management Corp. (AIMCo), signed an agreement to acquire a 65% equity interest in the Coastal GasLink natural gas pipeline project from TC Energy Corp., Calgary.

Following closing, TC Energy will hold a 35% limited partnership equity interest in Coastal GasLink and will be contracted by the limited partnership to construct and operate the pipeline.

Concurrent with the completion of the sale, TC Energy expects that Coastal GasLink will enter into a secured project financing construction credit facility with a syndicate of banks to fund up to 80% of the project during construction. Both transactions are expected to close in the first half of 2020, subject to customary regulatory approvals and consents, including the consent of LNG Canada—a joint venture of Royal Dutch Shell PLC, PetroChina Co. Ltd., Mitsubishi Corp., and Korea Gas Corp.

Coastal GasLink involves the estimated $6.6 billion (Can.) construction of 670 km of natural gas pipeline and associated facilities. Once completed, the pipeline will have an initial capacity of 2.1 bcfd and connect Western Canadian Sedimentary basin natural gas supply from the Dawson Creek, BC area to the LNG Canada liquefaction and export facility being constructed in Kitimat, BC.

Construction activities for the natural gas pipeline, which is backed by 25-year transportation service agreements with the five LNG Canada owners, has begun.