Stan Chapman reveals TC Energy's plan to capitalize on data centres near their pipelines across North America
TC Energy Corp. sees the growth of data centres in North America as a significant business opportunity.
Stan Chapman, executive vice-president, and chief operating Officer, noted during a conference call that over 60 percent of the more than 300 data centres currently under construction or proposed in the US are within 80 km of TC Energy’s existing natural gas pipeline system.
“We’re seeing a shift in site preferences (for data centres) from regions where big telecom infrastructure is in place to regions where energy and supply infrastructure is in place,” said Chapman.
He mentioned that many data centre operators now prefer to build and own their own on-site power generation facilities to meet their high electricity needs. This trend offers a considerable opportunity for these operators to connect to TC Energy’s natural gas pipeline system in the US, Mexico, and Canada.
“In Canada, there are around 300 data centre operations today. We could see that (power demand) load increasing by one to two gigawatts before the end of the decade,” Chapman added.
TC Energy reported a net income of $963m in the second quarter, a significant rise from $250m in the same quarter last year.
CEO François Poirier expressed optimism about the future demand for natural gas, driven by the growth of the liquefied natural gas (LNG) industry and increased power demands due to electrification, coal-fired plant retirements, and new energy needs.
“Never have I seen such strong prospects for North American natural gas demand growth,” Poirier said. “We are seeing natural gas demand reach record highs, and this is expected to grow by nearly 40 billion cubic feet per day by 2035.”
TC Energy recently struck a deal to sell a minority stake in its Western Canadian NGTL and Foothills natural gas transmission network to a consortium of Indigenous communities for $1bn.
The total enterprise value of the deal, including debt, is $1.65bn, making it Canada’s largest-ever Indigenous equity ownership agreement. This sale is part of TC Energy’s strategy to reduce debt, with additional transactions possibly being announced in the second half of 2024.
During the second quarter, TC Energy shareholders approved the spinoff of its crude oil pipelines business.
The new company, named South Bow, will manage the crude oil pipelines, including the Keystone pipeline system, allowing TC Energy to focus on natural gas infrastructure, nuclear energy, pumped hydro energy storage, and new low-carbon energy opportunities.
The spinoff is expected to be completed in the early fourth quarter.
TC Energy’s adjusted earnings for the second quarter were $978m, slightly down from $981m for the same period last year. Revenues rose to $4.09bn from $3.83bn in the previous year. The company declared a dividend of 96 cents per common share, up from 93 cents last year.
