(Calgary) Canadian pipeline operator TC Energy achieved record deliveries for its gas pipeline networks in the first quarter, thanks to booming electricity demand in North America.
The Calgary-based company said Friday its comparable profits from its natural gas segments in Canada, the United States and Mexico were $2.37 billion in the first three months of 2024, up from $2.18 billion. billion for the same period of 2023.
The company announced that deliveries on its NGTL system, which transports natural gas from Alberta and northeastern British Columbia to the Canadian and U.S. markets, averaged 15.3 billion feet cubic feet per day (Bcf/d), up 0.7 Bcf/d from the first quarter.
The NGTL system also achieved a new single-day delivery record of 17.3 Bcf/d.
In the United States, TC Énergie’s gas pipeline activity recorded an average daily throughput in the first quarter of 30 Bcf/d, up more than 5% year-on-year.
The company’s overall U.S. natural gas portfolio and specific assets, including Columbia Gas, Columbia Gulf and Great Lakes Gas Transmission, achieved record deliveries.
“Growth in demand for natural gas continues to power the United States as electricity demand increases,” President and CEO François Poirier said on a conference call with analysts .
“2023 was a record year for electricity combustion in the United States and that strength continues into 2024,” he added.
According to a report released earlier this year by consultancy McKinsey, natural gas is expected to play a central role in the energy transition, with global demand expected to grow by 10-15% after 2030 before falling as the energy transition progresses. .
Growth is expected to be driven by the shift from coal to cleaner-burning natural gas, but also by increased demand for natural gas-fired electricity due to the electrification of buildings, transportation and heavy industry.
Data centers, a growth opportunity
In the important American market, the growth in demand for natural gas was particularly significant. According to the U.S. Energy Information Administration, in 2023, 89.1 billion cubic feet of natural gas per day were consumed in the United States, the highest figure on record. Since 2018, natural gas consumption in the United States has increased by an average of 4% per year.
Demand is fueled by a number of factors, including low natural gas prices, coal-fired power plant shutdowns and the intermittent nature of wind and solar generation for which natural gas often serves as a backup.
TC Energy also expects growth in natural gas due to emerging demand for data centers. According to McKinsey, electricity consumption in US data centers is expected to increase by 10% by 2030.
“We see significant growth opportunity related to increased demand in the coming years due to data centers,” said Stanley Chapman, executive vice president and president of natural gas pipelines at TC Energy.
“The reliability requirements associated with data centers are also leading to an increased appreciation of the role that natural gas is going to play in supporting these loads as well,” he said.
Profit down, but revenue up
TC Energy reported first-quarter profit of $1.20 billion, or $1.16 per share, down from $1.31 billion, or $1.29 per share, in the same period last year.
Revenue for the quarter totaled 4.24 billion, compared to 3.93 billion in the first quarter of 2023.
On a comparable basis, TC Énergie claims to have earned $1.24 per share during its last quarter, compared to $1.21 per share on the same date last year.
During the quarter, TC Energy announced an agreement to sell its Portland natural gas transmission system to BlackRock through a fund managed by its diversified infrastructure business and investment funds managed by Morgan Stanley Infrastructure Partners.
It also announced a deal in March to sell its Prince Rupert natural gas transmission project to the Nisga’a First Nation – whose lands are located on the northwest coast of British Columbia, near the town of Terrace – and its partner, Texas-based Western LNG.
TC Energy continues to work on spinning off its pipeline business into a separate company, called South Bow. Shareholders are expected to vote on the proposed split at TC Énergie’s annual general meeting scheduled for June 4.