Q4 2019 Earnings Call
All participants please continue to stand by the conference will begin momentarily. Once again, please continue to stand by and we thank you for your patience.
[music].
All participants please continue.
The conference will begin momentarily.
Once again, please continue to stand by and we thank you for your patience.
[music].
All participants please standby you're meeting is now ready to begin good morning, ladies and gentlemen, well come to the TC pipelines LP 2019 fourth quarter results for conference call I would now like you're trying to meeting over time is Rhonda Amundson. Please go ahead Ms. amundson.
Thank you operator, and good morning, everyone welcome to TC pipelines fourth quarter 20, Nike Inc. conference call I'm joined today by or President Nathan Brown, our VP and general manager Gene Watson and our principal financial officer check Morris.
Please note that a slide presentation will accompany their remarks and is available on our website at TC pipelines LP Dot com, where it can be found in the investor section under the heading events and presentations.
Nathan will begin the call today with a review of TC pipelines, 2019th fourth quarter and annual highlights and result.
Do you need will provide a commercial update on the partnership's assets and our growth program following which Chuck will provide a review of our financial results for the fourth quarter and the year ended December 31 2019.
Neither am overturned wrap up her remarks with a brief discussion never growth strategies and close with some key take away.
Following the prepared remarks, I will ask the conference operator to coordinate your question.
Before we begin I would like to remind you that certain statements made during this conference call will be forward looking regarding future events in our future financial performance. All forward looking statements are based on our beliefs as well as assumptions made by any information currently available to us.
These statements reflect our current views with respect to future events and are subject to various risks uncertainties and assumptions as discussed in detail in our 2019 10-K as well as or subsequent filings with the Securities and Exchange Commission.
If one or more of these risks or uncertainties materialize or if the underlying assumptions prove incorrect actual results may differ materially from those described in the forward looking statements.
Please also note that we use the non-GAAP financial measures adjusted earnings adjusted earnings per common unit EBITDA, adjusted EBITDA and distributable cash flow during our presentation. Adjusted earnings are used to provide a more comp comparable earnings may measure from quarter to quarter and exclude the impact of certain nonrecurring items.
It does an approximate measure of our operating cash flow during that period and reconciles directly to net income and distributable cash flow is presented to provide a measure of cash generated during the period to evaluate our cash distribution capability. These measures are provided as a supplement to GAAP financial results and we provided a reconciliation of the most closely related.
The GAAP measures in or is he see filings with that I'll turn the call over to Nathan.
Thanks, Rhonda good morning, everyone and thanks for joining us today.
Outlined this morning, our news release and looking at slide four I'm pleased to share Tc pipelines solid quarterly results with our portfolio pipeline assets continuing.
Right.
We generated $76 million net income during the fourth quarter 49 team in 280 million for the here.
After adjusting for the non cash impairment charges for bison interest.
For 28.
Bisons onetime contract termination proceeds during the same period.
Or 2019 results were 12%.
86 million and 317 million, we earned on adjusted basis, It's a period of <unk>.
The decrease was largely due to lower revenue for bison at 29, <unk> the partial pay out its contracts and wait for <unk>.
Revenue from our other pipeline systems is larger comparable year over year discretionary revenue strong natural gas flows mitigating the rate decreases emanating from the 2018 Burke actions.
Our adjusted EBITDA was similar to lower at 119 million for the quarter and 469 for the full year 2019 compared to the same period and when everything.
We generated 76 million in distributable cash flow in the fourth quarter, if we 19 and 349 for the year compared to 28 games, where a DCF was 95 million at 391 million respectively.
The primary drivers for the decrease Robert earnings and EBITDA, together with higher maintenance and integrity capital expenditures, resulting from higher system utilization in response to sustained increase natural gas transportation volumes.
The higher maintenance costs, although a drag on distributable cash flow what the positive environment higher natural gas flows our pipeline and these costs will be added to rate base and enjoy return.
On capital through future cold.
We paid out 47 million in distributions to unit holders.
The fourth quarter and 189 million for the for your 20 Nike.
The partnership also declared its fourth quarter distribution of 65 cents per common unit, which is consistent but a quarterly distribution between 19 and breach quarter 2018.
We believe that maintain a distribution current boes prudent in order to continue building at healthy financial position, which will allow us to self fund organic growth as we continue to report.
Chuck will discuss our financial results in more detail a little later in the call.
We continue to advance our organic growth program and work has begun on our GTN Express project and test for expansion is also underway.
Our other PNG Ts organic projects are progressing well with phase two important express in phase one of West for express both in service on November one 2019, providing for incremental capacity in our PNG, yes pipeline system in the northeast.
We continue to develop other projects across our portfolio, including that your core enhanced by compression project and the North Baja Express project, both are low impact compression only projects.
The North Baja project is subject to our shippers final investment decision and airport project is the process obtaining regulatory and other approval.
You need will discuss these and other commercial developments more detail a couple of minutes.
During the fourth quarter looking at our financial position our bank leverage ratio was approximately 3.4 times distribution coverage also remained very strong and Paul approximately 1.6 times for the quarter ended December 31 2019.
These results are a testament to the resiliency of our asset portfolio and the continued success of our commercial strategies, which combined to create ongoing value to our unitholders.
Well, we're proud of our financial performance returns, we have generated for unitholders. We know our ongoing success depends on our ability to balance profitability with safety and environmental and social responsibility.
I want to stress the safety and reliability are critical priorities for.
I have a long history of working collaboratively with our stakeholders and it here to the high standards governments.
Our general partner TC Energy has 65 year track record of safe and reliable operations, we're committed to protecting the environment and all we do.
Our natural gas assets are critical to the quality of life and the communities. They serve and believed our systems will be important contributors in attributing it achieving greenhouse gas emission targets to further improve carbon footprint of North America and beyond.
I'll now turn call over Jeanine Watson, our VP and general manager to provide additional color on or assets or commercial developments together with our market outlook.
Thanks, Nathan and good morning, everyone.
Moving onto slide five.
TC pipelines assets performed very well this quarter driven by continued strong demand for our transportation services.
Commercial teams across our footprint worked hard to market short term and interruptible transportation and discretionary services successfully recouping nearly all revenue loss due to the 2018 FERC action.
Turning first to our largest asset.
DTN benefited from T.C. energy the ongoing Debottlenecking project upstream of Kingsgate, enabling the delivery of an incremental 125000 Dekatherms a day on November 1st 2019.
These increased flows together with the short term failed enable GTN to largely recoup the 10% rate decrease arising from in 2018 settlement.
Looking forward, we anticipate a further 250000 dekatherms a day upstream capacity will become available for transportation to GTN by the end of Twentytwenty.
These volume increases will bring the upstream systems capacity up to parity with GTN current maximum capacity and our exclusive of the GTN Express project volumes, which will be on stream by the 2020 to 2023 timeframe, which I will discuss in a few minutes.
Northern borders annual equity earnings were roughly equivalent to those earned in 2018.
Northern border generated approximately $10 million higher operating revenue in 2019 compared to 2018 as its marketing team successfully sold packages of short term forward and backhaul capacity via a series of open season held throughout the year.
Driving strong discretionary transportation sales.
Operating costs were up on this out but due to high utilization and higher interest expenses.
Great Lakes continues to be a steady performer, though its annual equity earnings were down about 8 million compared to the prior year.
This result is primarily due to increased oh, M&A costs relating to securing certain necessary land right.
Revenue at our Bison pipeline was down about 11 million in Q4 of 2019 due to the contract buyouts at the end to end of that year I'm sorry at the end of 2018.
We continue to conduct all necessary maintenance on this asset and are ready for potential deep redeployment as part of a buck in solution, which I will discuss on the next slide.
Portland's results in fourth quarter held steady compared to Q4 2018.
As the last of its historical contracts terminated during the summer months and it relied on short term sales until its new PXP and Westbrook Express contracts took effect November 1st.
Quarterly results on our north Baja and Tuscarora transmission systems were all roughly comparable to Q4 of 2018.
These assets are highly contracted on affirmed basis and have the opportunity to make incremental short term sales, which they capitalize on went back and market conditions are right.
Iroquois was also a steady performer with strong from contracting if transportation revenues were whoever lower than in Q4 of 2018 due to both its scheduled rate decrease and because the weather related discretionary opportunities of 2018 did not manifest in 2019.
[music].
Finally, I will note that all of our assets operated at high levels of availability with no significant safety or operational issues.
I would like to highlight our Tuscarora operating team who were recently recognized for outstanding performance.
This team has operated thereafter for an impressive 8950 days, that's nearly 25 years without recording a single safety incident.
Turning to slide six.
A key focus for us if the execution of our organic growth program.
We began work on our GTN Express project in Q4 with a view to having this our largest ever organic growth project fully in service by November of 2023.
There's an integrated reliability and expansion project underpinned by fixed negotiated rate contracts for an average turn turret term in excess of 30 years.
Phase one of GTN expressed entails the removal of legacy compressors at three station, replacing them with new state of the art compression technology.
Detailed engineering work is ongoing for these like for like replacement, which are expected to be in service by the end of the here in 2021.
Phase two of GTN Express will expand the capacity of the GTN expression.
Yeah and system [laughter] by a total of approximately 250000 Dekatherms through the addition of a new high efficiency compressor units I didnt existing compressor station to being serviced by November 2023.
We're also progressing our Tuscarora Express project, a 13 million compression only project at our existing compressor station at Wadsworth, Nevada.
This project will add 15000, Dekatherms a day of capacity when completed in November of 2021 to service modest natural gas demand growth in this region.
We anticipate making the necessary FERC filing for this project around mid year.
And finally, as we have been highlighting for the last several quarters. Our Portland Express project is proceeding on time and on budget with phase one in service in late 2018 phase two in last November and Phase three in service plan for November one of Twentytwenty.
This project is approximately $85 million in total capital costs and will add approximately 183000 dekatherms per day up capacity to Portland.
We're also proceeding with our Westbrook Express project at Portland.
This is an approximately 125 million dollar multi phase expansion project designed to help served markets in northern New England, and Atlanta Atlantic Canada.
Phase one of this project came into service November of 2019.
Phase two requires the addition of a compressor and associated facilities at an existing station on the Portland system and will bring a further 69000 dekatherms per day affirmed capacity to this pipeline system by November of 2021.
The phase three expansion for this pipeline is supported by work to be done on T.C. Energy's assets upstream a Portland and will provide ride capacity for an additional 18000 dekatherms per day to be in service by November of Twentytwenty too.
Once both projects are fully in service PNG taxes capacity, well look almost doubled from 210000 Dekatherms per day at the beginning of 2018 to close to 400 <unk> a day by the end of Twentytwenty.
Oh, sorry, Twentytwenty too.
Looking forward, we continue to assess what other opportunities may arise to further take advantage of TCP existing pipeline network.
You can see on the map that we've highlighted for current opportunities being developed.
As was noted on previous earnings calls we are developing the north Baja Express project, an estimated 90 million dollar project to transport an additional 495000 dekatherms per day of natural gas along north Baja mainline system between Ehrenberg, Arizona and Ob, California. This.
Project contemplate a single compressor will be added to our existing rather station at ehrenberg.
In December of 2019, North Baja filed an application with FERC to authorize the construction of the project.
Sempra LNG International has filed an intervention in this process identifying itself as the anchor shipper for this project.
We anticipate and if I D decision on the project from the this chipper by July of Twentytwenty with a potential in service date as early as November 2022.
Also of note is the potential expansion project on the Iroquois system, which we referred to as enhancement by compression or the Xcede project.
You are quite provide service in the northeast region that is at the forefront of AD advocating for reduced dependency on fossil fuel and development of renewables.
Enabling enabled by a ship enabled by a shift from higher to lower emitting energy resources, including the mandated phase out of fuel oil.
The exceed project has the potential to optimize the Iroquois system to meet the current and future gas supply needs of utility customers Con Edison and national grid, while minimizing the environmental impact through compressor enhancements at existing compressor stations along the pipeline.
Facilitating a rational and orderly transition to a renewable energy future.
If successful the project total capacity is estimated to be approximately 125000 dekatherms per day with an estimated in service date in November of 2023.
Earlier this year Iroquois filed an application with FERC to authorize the construction of the project.
The capital cost is destined to estimated to be $250 million and it will be 100% underpinned by contracts with 20 or terms.
It remains subject to various regulatory and other approvals.
Now turning to the Bakken area, we know that there is a significant supply push in the order of up to half a bcf per day speaking incremental take away capacity that could be met by our northern border and bison pipeline.
Our business development team continues to progress a potential projects that would leverage our existing footprint to provide a cost effective incremental market market outline for Bakken gas via a reversal of the Bisons system.
And finally, our business development team is focused on finding opportunities to offer seamless transportation service from Canada to U.S. market, we have several path, which include our great Lakes pipeline.
TC Energy just announced last week, it's Alberta Express project and in our expansion project that will utilize existing capacity on the great Lakes and Canadian mainline system to connect growing supply from the WCS b to the U.S. Gulf Coast LNG export markets.
This project will result in 155000 Dekatherms per day of long term maximum rate transportation by others contract between eight and are in Great Lakes for an average contract tenure of 19 years.
The anticipated in service date is twentytwenty too.
We don't foresee any any material capital spending on great lakes, and really relation to Alberta Express.
As we've noted before greatly continues to be a valuable constant conduit for natural gas and is a critical Lincoln moving gas from producing basins to keep markets.
So in summary, Tcps management is pleased with our progress as we execute on or existing growth program and we continue to work towards new self funding growth opportunities across our footprint.
Turning now to slide seven.
This is the news light for us.
Organic growth program is much more significant than it has ever been given our shift in strategic focus to identify sustainable self funded growth opportunities across our portfolio.
The chart on this slide illustrates our Catholic Capex outlook for our major projects over the 2020 to 2023 period.
The bars represent TC pipelines proportionate share of estimated capex based on our ownership levels.
North Baja and Iroquois projects are as mentioned earlier earlier subject to further approvals. We have included them given their stages of development.
The Capex for our GTN Express project is included in the chart as growth Capex.
This is essentially a modernization program designed to replace an upgrade aging compressor in compressor infrastructure increased reliability and integrate cutting edge technology at sites along its route.
It will modernize existing system and also grow capacity. So it was more like growth capital then maintenance capital.
We will self fund the capital during this period through a combination of debt at asset levels and contributions from Tc pipelines.
The latter funded from cash from operations together with our revolving facility as required.
No new equity issuances are anticipated.
Our proportionate share of maintenance Capex is expected to be 113 million in Twentytwenty again self funded.
And as Nathan mentioned earlier.
[noise]. This capex is expected to be added to our pipeline systems respective rate basis, and recovered through fixed negotiated rate contracts and or rate recourse rates overtime.
I will now turn the call over to check Morris, our principal financial officer to discuss our fourth quarter and annual fine final results in more detail.
Thanks Gene and good morning, everyone.
Moving on to slide eight I'll now review, the partnership's fourth quarter and annual 2019 financial results.
Net income in the fourth quarter was $76 million were 95 cents per unit compared to a loss of $413 million were $5.80 per unit in the fourth quarter of 2018.
After adjusting for nonrecurring items in Q4 2018 adjusted earnings of $76 million were 12% lower year over year.
This decrease was primary <unk>, primarily reflect there was a lower revenues advising given the termination and buyout of the 60% of its called trucks at the end of 2018, partially offset by lower depreciation and financial charges.
Our adjusted earnings for the full year were similarly, lower by 12% to $280 million in 2019 versus 317 million in 2018 for the same factors.
Adjusted EBITDA of $119 million in the fourth quarter of 29 team was lower than the same quarter in 2018 by 15%.
Again, primarily due to the lower revenue advise them and also from higher operating and maintenance expenses in 2019 through the increase in integrity and compliance costs as well as higher corporate support costs.
On an annual basis, adjusted EBITDA was $460 million in 2019 compared to $526 million in 2018.
The partnership paid distributions of 40 $47 million per common unit holders in the fourth quarter. The single mode that was paid in Q4 2018.
For the full year of 29 team the partnership due to $189 million and distributions compared to $218 million in 2018.
The decline was due to the decrease in the quarterly distribution of 35 cents per common unit declared beginning in the Q1 of 2018.
We also paid $13 million to our class B units in 2000 $19 million lower than that was paid in 2018.
The reduction year over year was as a result of higher maintenance capex at GTM, which reduced the distributable cash flows generated.
As David mentioned earlier, we declared our fourth quarter 2019 distribution of 65 cents per common unit.
This is consistent with that declared in the previous quarters in 2019 and for each quarter in 2018.
Distributable cash flows were $76 million in the fourth quarter of 2019 $19 million lower year over year.
For the full year distributable cash flow was $340 million and 29 team compared to $391 million in 2018.
The decrease in both instances was due to the same factors impacting net income together with generally higher maintenance capital expenditures on her pipeline systems during the quarter.
Offset by lower interest expense due to our ongoing debt repayments.
Going forward as noted by Janine.
You can express costs are going to be classified as growth capital.
Therefore, not be netted against our distributable cash flow.
Turning to slide nine.
Revenues from our consolidated pipelines of $104 million in the fourth quarter of 29 team were lower than those in the same quarter last year by approximately 50%.
And our full year results showed a decrease of over 25%.
As we mentioned earlier this was primarily the result of the one time contract termination payments for buys in Q4, 2018, together with lower buys and revenue going forward starting in 2019 due to lower contracting base.
Overall revenue from our other consolidated pipelines in 2019 was comparable to that in 2018.
The scheduled rate decreases on our systems emanating from the 2018 productions were largely mitigated by increased discretionary revenue as a result of strong natural gas flows across our portfolio and solid contracting owners systems.
Equity earnings in the fourth quarter of 2019 were $1 million higher than that.
The same quarter of 2018.
On an annual basis, the 13 million dollar decline was primarily due to weather impacts on your required and great lakes, where the incremental seasonal sales during the cold winter of 2018 were not achieved in the same period in 2019.
You recall also had a rate decrease related to its 2019 reached settlement with the trippers, resulting from the 2018 for reductions and Great Lakes is compliance and corporate support costs were higher year over year.
Operating maintenance and administrative expenses during the fourth quarter were comparable to those same quarter of 2018.
Depreciation expense was also lower by 17% as result of the asset impairment on buys and that we recognized during the fourth quarter of 2018.
Financial charges were 9% lower in the fourth quarter of 2018 versus the same period in 2018, and 10% lower than the full full year due to the ongoing reductions in our outstanding debt balance, which amounted to $106 million for the full year of 29 team.
Moving now to our financial position on slide Tim.
Our healthy financial position is reflective of the proactive measures that we have taken over the past few years.
Our balance sheet is strong and our solar capital structure is underpinned by our high quality energy infrastructure pipeline assets.
Our investment grade credit ratings, including or one our recent one notch upgrade from S&P from Triple B minus the triple B flood provide us with the financial flexibility as we look to organically grow the portfolio in the future and we believe our ratings reflect our solid financial condition and outlook.
We will execute our suite of organic growth projects on the self funded basis without the need to access the equity capital markets.
Our liquidity position remains strong.
The partnership has $500 million of Undrawn and available borrowing capacity under its senior credit facility as of February 20 or 2020.
Consistent with our self funding model in order to build capacity for future organic growth, we continue to prudently manager outstanding debt balance.
We reduced our overall debt balance by $106 million in 2019, resulting in a bank leverage ratio of approximately 3.4 times.
As we've noted in previous earnings calls the bank leverage ratio is exposed to migrate to the high threes. The low four times area as the impact of onetime items, including the bison contract buyout are reflected in the calculation.
We maintained our distribution in 2019 at 65 cents per common unit, resulting in a solid distribution coverage ratio of 1.6 times for the quarter ended December 31st 2019.
And as Janine a nascent mentioned earlier, we continue to execute on our organic growth program, including GTN Express Tuscarora Express and PGM PNG Chiasmas projects with both PXP and Westbrook Express proceeding on time and on budget.
And we continue to use our steel on the ground advantage across our pipeline system to explore additional growth opportunities.
That concludes my remarks on the fourth quarter financial results I'll now turn the call back over Tonight.
Thanks Chuck.
Ill refer to slide 11.
As I mentioned at the outset, we had a very good quarter this year and our assets continue to perform well proving out there resilience strong competitive position.
Going forward or cash flow continue to be derived from our portfolio of critical natural gas pipeline infrastructure assets underpinned by long term take or pay contracts of credit shippers.
In aggregate our systems are 91% contracted on long term basis.
Continue to prudently manage our financial position to believe our actions resulted in a strong balance sheet our.
Our bank leverage ratio is currently approximately 3.4 times and our distribution coverage. This quarter is very healthy 1.6 times.
Healthy metrics are enabling us to self fund organic growth as we outlined earlier in each for GTN test for Pgts projects.
Longer term, we're targeting to maintain or bank leverage ratio in the high three low four times area and distribution coverage ratio of approximately 1.3 to 1.4 times.
Reiterate that we do not need to react to access the equity capital markets to fund our current or a program as Chuck noted consistent with our self funding mall and in order to go capacity for organic growth, we continue to pay down debt levels. This year and execute on our debt on our de levering program.
Our focus remains on the optimization of our asset portfolio and will include organic growth over time.
We're very excited for fee per se in approximately 700 million of growth projects across our suite of assets.
These include our current GTN, Tuscarora and PGP MGTS product express projects together with our north Baja and airport development opportunities.
We'll continue to advance other options that fit within our geographic footprint and meet our return expectations.
Bottom line is that our metrics are robust and we're focused on executing our current and potential growth projects in order to drive long term growth continued value for our stakeholders I'll now turn the call back over to Ron.
Thank you Nathan.
We've now I'd like to open the call up for questions. Operator. Please go ahead.
Thank you we will now be taking questions from the telephone lines. If you are all speakerphone. Please lift your handset before making your thoughts from.
If you have a question. Please press star one on your thoughts on key Bob If you wish to cancel your question. Please press the pound.
Please press star one at this time for any questions.
I will be a brief pause while participants register for questions and thank you for your patience.
The first question is from Praneeth Satish from Wells Fargo. Your line is now open. Please go ahead.
Hi, Thanks, Good morning, Im just curious.
On northern border when do you think gas on that pipeline will hit the the beauty you limit that exists on downstream pipes is that something that you see happening later this year.
Well we're.
We're not pinpointing, a sort of timeframe, we see limitation bid heads as far as that goes we're working with with folks on both ends of the pipe to make sure that were.
Delivering the product base, they expected as to our specs, but in terms of.
When that's changing operationally or were those numbers are going.
We're handling that within the context of our customers and their customers and make sure everything stays as expected.
Okay, and then I'm, just curious to the northeast whether theres been any thought about offering shorter duration contracts for new projects like Iroquois versus the 20 year contracts that are currently being considered I guess this would be in the context of providing a bridge towards the renewable future.
Well, we certainly evaluate all the opportunities as they come through.
I'd say the the nature of all the different expansion projects that Janine walk through today are ours are longer duration than that so I think the market as it sits right now sees a longer duration to the value that we can offer.
Yes, certainly as a as opportunities come to us, we'll evaluate them discreetly, but for right now what we're executing on has been significantly longer duration in that.
Great. Thank you.
Thank you.
The next question is from Michael merchandise from Goldman Sachs. Your line is now open.
Thanks for congrats on a on a good year end. Thank you for taking my question real quickly can you walk back through in.
Bakken solutions, just how specifically that project could work kind of how should we think about origin and termination points and weather.
There are assets not owned by TCP would be would need to be brought into this to bringing integrated solution for producers.
Yes, Thanks, Collyn, Michael I think weve.
Probably gone about as far as in tune with a specific business. It right now as we've mentioned that passes the Bakken solution and there's a lot of different moving parts kind of on both sides of the other northern border or advice and that they need to get aligned before for the market kind of agree on on how that's going to work through.
Our BD teams are hard at work on that and we look forward to.
Getting through exactly those kind of specific businesses.
Got it and when you think about the north North Baja Express expansion.
And in the anchor customer on that are you thinking about it as a hey, this is gas that's going to flow in the California and be used by one of the gas utilities in California, where is this.
Mechanism or way to get gas down in new Mexico for potential LNG expansion there.
Well through some of the interventions.
And the filings that we've had simper LNG was identified as a customer the anchor shipper on this project.
So presumably they've got their plans and you put that together, but it's a as far as takeaway capacity and needs and uses for for the Mexican market Fehrenbach, California, I think there's a there's an argument need for all those users.
We are certainly.
Turning that greater respond as it has cost us into a commercially viable project.
And to turn that into a viable project do you need.
Pipeline capacity that touches our comes in.
Western Arizona, meaning.
Think about some of the to some of the big long haul pipes that go out of the Permian. There do you need those could get upsized as well and are they integrated into this process.
Well clearly this quiet up to a thats come from from those areas, that's where it's worthwhile hooks into it at ehrenberg, So those supply pipes.
I have to work can be upstream challenges as it goes.
But again for as far as specific goes it's.
We're working those group.
Got it thank you guys much appreciated.
Thank you next question is from Mark Sollecito from Barclays. Your line is Malcolm. Please go ahead.
Good morning.
Thank you mentioned elevated I want him expense on Great Lakes and 29 team just curious if we should expect I want him to moderate in 2020 or 2019, a good run rate to use going forward.
Well weve pretty hesitant to give that specific guidance I'd say 2019 wasn't overly anomalous, but we do have timing changes in program fluctuations here in there that we certainly look too.
But to optimize and that meet our regulatory and operational requirements. So.
Yes, I'd hesitate to say run rate, but there wasn't anything specifically anomalous I'd say that popped out, but you do have normal fluctuations year to year.
Got it thanks, that's all for me.
Thank you.
Once again, if you have a question. Please press star one if you wish to cancel the question. Please press the Tom Ti go next question comes from Matt Taylor from Tudor Pickering Holt Your line is open.
Yeah. Thanks for taking my questions here, just a follow up in northern border and bison.
Are you looking to add capacity there ahead of a reversal on northern border or does it is it still dependent on doing reversal just clarification would be helpful.
So.
The reversal would be on on bias and what we would contemplate as a gas delivery solution toward a Cheyenne hub.
So thats by geographic necessity, that's a that's a reversal there but on bison that the physical reversal work is would would be fairly fairly normal. It does not have any compression of its own.
And northern borders been running full for quite some time right now.
And in certain periods. So additional capacity would you needed to get that get that additional gas the flow down toward bison. So.
Yes that type of work is what's what's been engineered now and where our BD guys are working through with the on players in the market.
Yeah. Thanks for that I guess my question is could you go ahead, and just expand northern border without assuming and move more gas kind of the Midwest or.
Are you are you thinking that you need a reversal in order to provide more and market Optionality I'm just curious like if the reversal is absolutely necessary or you could add capacity on border.
Yes, there are several options there that we could undertake and they have varying costs in varying competitiveness to different markets as your sorted out but as I mentioned earlier, it really depends on where the market wants to go what makes the most sense and.
Whether there's a over utilize assets in places undo that underutilized assets and others. All that's in the mix to make sure that we get to get the gas to market were the producers and customers can use it.
Thanks for that and then on Great Lakes that Alberta Express announcement is that that incremental contracted capacity on top of what you guys announced back in Q2 I.
I think I believe is 800000, a day on an arm just I'm just curious.
Whether that was included or whether to think of that is on top of the 800.
I think it's inclusive of that.
Okay. Yeah, I think can you give us an update there on great lakes in terms of I believe that's the last for settlement that's outstanding and do you guys have some sort of expectation of it.
Impact there.
No we don't really.
As you noted it's a it's totally open item. So we continue to watch it closely but in terms of what what next steps might be.
We don't have anything that is both.
Great and then one last one if I may look like the spread between your stock and your parents is near the wise, it's ever been has anything changed there on how apparent views.
Going forward or is it still status quo.
Yeah were.
As far as this measure team goes we're focused on operating this would assets we've got as far as a as TRP strategy goes we'll defer to them.
Great. Thanks for taking my questions.
Thank you.
The next question is from Alex Kania from Wolfe Research. Your line is now open.
Thanks.
I guess a couple of questions. The first is.
Just on the I guess with respect to the North Baja project, you mentioned a potential in service date of.
November as early as I guess November 2022 is that for the.
You can project itself, you expectations or the pipeline just kind of curious about how you think about.
When the when the pipeline needs to be in service in front of units are misstated that.
Project at the end of the pipe.
That's the in service date for our asset.
So clearly.
There could be some coordination between the two but that's okay. How early we could have that in service.
Great and then.
On the maintenance Capex outlook, you gave for 2020.
It looks like it is a step up from from 2019 2018 Im just wondering if that's a.
It would be appropriate too soon that's kind of a new sort of run rate number that we should be looking at going forward or is there specific items that just happened to be kind of in the maintenance plan.
That that would represent some elevation versus previous years.
Yeah, again, I kind of go back to the prior question on auto and them on Great Lakes is that we we have we have programs that ebb and flow and some cyclicality in there.
So anyone any one year.
Is it necessarily represent represent a trend.
That said, there's plenty of utilization across all of our systems. So on the whole with you look back.
The 10 years of 10 years ago certainly.
We're running our systems harder and that requires more minutes for a piece that we're able to reinvest back into the pipes. So.
The long way of saying, we we're not we're not gonna be able to say, we've got a trend here or we're going to give you guidance on it I think what we do as we optimize that spend where we can and where we prudently invest in.
Reliability of our system, we rolled out back into rates and structure, our commercial strategies around as well.
Great and just last one from me if I could.
I think that we've seen in California and in the northeast, it's maybe a little bit more of a policy push for greater electrification of.
Previously was used for residential heating and such just wondering if as you because you're talking with you mean heavy commercial discussions with a lot of the shippers that are in those areas are you hearing any any discussions of what about what that might mean for them overtime or what your thoughts are.
Back to those.
Discussions.
You know certainly to the policies around around whether its hydrocarbons in general are electrification and different fuel switching and that type of thing is very much in the overall broader strategy of of TC pipelines and Tc energy as a whole.
So we keep our we give our fingers on the Paul so that to make sure. We're we're.
Paying attention to relevant.
Relevant trends in the areas, where we serve.
I wouldn't say that we've got any any immediate near term concerned just given the given a push of projects, we have coming to us on each of our assets. So we're we're pretty hard into that.
As far as any.
Energy transition goes the competitiveness of natural gas is really playing out and in a real good strong contributor to what all the needs are and all of our markets.
As we had.
The GTN Express project is good case in point, where when we had our open season, we had 30 year contracts that in front of Pacific Northwest.
From regulated utilities in that area. So.
It shows us that the everyone sees the value of its there for the foreseeable future as things transition I think it will will certainly stay on top of that and make sure we're utilizing our assets to highest at Boston.
Great. Thanks, so much.
Thank you.
Ladies and gentlemen, this concludes the question and answer session. If there any further questions. Please contact investor relations at TC pipelines LP I will now turn the call over to MS. Rhonda Amundson. Please go ahead.
Yes. Thank you everyone for your participation today, we continue to appreciate your interest in TC pipelines look forward speaking with you again soon thanks.
Thank you.
Conference has now ended please disconnect your lines at this time and we thank you for your participation.
This conference is no longer being recorded no she's promoted coffeehouse it that there won't be.
[music].
Please note that this conference call has ended please disconnect your lines at this time. Thank you.
Okay.
Okay.
Okay.
Yes.
[music].