TC Energy (TSX: TRP)(NYSE: TRP) owns a natural gas pipeline network that transports natural gas from supply basins to local distribution companies, power generation plants, industrial facilities, interconnecting pipelines, liquefied natural gas (LNG) export terminals, and other businesses across Canada, the United States (U.S.), and Mexico.
The company’s network of pipelines taps into most major supply basins and transports over 25% of continental daily natural gas needs through wholly owned natural gas pipelines and partially owned natural gas pipelines. In addition to TC Energy’s natural gas pipelines, the company has regulated natural gas storage facilities in the U.S. with a total working gas capacity of 535 billion cubic feet (Bcf), making it one of the largest providers of natural gas storage and related services to key markets in North America.
Diverse segments
In addition, TC Energy’s natural gas pipeline business is split into three operating segments representing the company’s geographic diversity in Canada, the U.S., and Mexico. The company is focused on optimizing the value of TC Energy’s existing natural gas pipeline systems, while responding to the changing flow patterns of natural gas in North America. TC Energy also pursues new pipeline opportunities to add incremental value to the company’s business.
Developing new projects
Further, TC Energy’s key areas of focus include in-corridor expansion and extension of the company’s existing large North American natural gas pipeline footprint and connections to new and growing industrial and electric power generation markets. The company is also focused on expanding TC Energy’s systems in key locations and developing new projects to provide connectivity to LNG export terminals.
Also, the company is looking to establish connections to growing Canadian and U.S. shale gas and other supplies. Each of these areas plays a critical role in meeting the transportation requirements for supply of and demand for natural gas in North America. The North American natural gas pipeline network has been developed to connect diverse supply regions to domestic markets and, increasingly, to meet demand from LNG export facilities. Use and growth of this infrastructure is affected by changes in the location and relative cost of natural gas supplies as well as changes in the location of markets and level of demand.
Expectation of continued growth
TC Energy has significant pipeline footprints that serve two of the most prolific supply regions of North America, which includes the Western Canadian Sedimentary Basin (WCSB) and the Appalachian basin. The company’s pipelines also source natural gas from other significant basins including the Gulf of Mexico. TC Energy expects continued growth in North American natural gas production to meet demand within growing domestic markets, particularly in the electric generation and industrial sectors which benefit from a relatively low natural gas price.
In addition, North American supply is expected to benefit from increased natural gas demand in Mexico and access to international markets via LNG exports. TC Energy expects North American natural gas demand, including LNG exports, of approximately 128 Bcf per day by 2025, reflecting an increase of approximately 17 Bcf per day from 2020 levels. This positions it very well.
