TC Energy (TSX:TRP) Advances Coastal GasLink Phase 2 Expansion

• TC Energy (TSX:TRP) plans to advance Coastal GasLink Phase 2 after LNG Canada’s positive Final Investment Decision on its expansion.
• The planned build out is expected to nearly double pipeline capacity to supply natural gas to LNG Canada’s export terminal in Kitimat, B.C.
• Management highlights potential benefits for Indigenous and local employment linked to the expanded Coastal GasLink construction and long term operations.
• The move to proceed with Coastal GasLink Phase 2 is important. However, investors should weigh it alongside TC Energy’s broader risk picture. Take a look at 2 warning signs (2 major) we have identified for TC Energy.

Consider exploring other companies in the broader energy infrastructure space through 39 power grid technology and infrastructure stocks.

TC Energy operates large natural gas and oil pipeline networks across Canada, the United States, and Mexico, so an expansion linked to LNG Canada fits directly into its core infrastructure role. With a market value of about CA$86.6b, the business already operates at significant scale in North American energy transport.

2 things going right for TC Energy that this headline doesn't cover.

Coastal GasLink Phase 2 puts TC Energy’s growth story and risk warnings on the same track

The investment story around TC Energy is that long haul gas infrastructure can still deliver relatively steady, contracted cash flows even as energy transition pressures build, and Coastal GasLink Phase 2 plugs straight into that argument.

"Investors may be overestimating TC Energy's long-term revenue and EBITDA growth by assuming that the current surge in North American natural gas demand, driven by LNG export growth, coal-to-gas conversions, data center buildouts, and electrification, will persist at elevated rates..."

See how the full story points towards a CA$98.78 fair value for TC Energy.

The Phase 2 build fits the bullish side of the TC Energy Narrative, which leans on brownfield-style expansions, long-lived pipes and take-or-pay style contracts to support more stable earnings. It also lines up with the idea that LNG export demand could keep assets like Coastal GasLink heavily used, similar to how Enbridge and Williams lean on contracted gas corridors.

The same project sharpens the concerns in that Narrative around leverage, execution risk and long-duration fossil fuel exposure. Analysts have already flagged interest coverage and dividend sustainability as pressure points, so another large, multi-year build only works if construction timing, costs and contract quality hold up against changing climate policy and competing energy options.

Reading news like this ultimately comes down to whether you think TC Energy’s long contract-heavy gas network can stay valuable long enough to justify the extra capital, which is exactly what its Narrative tries to frame.

Add TC Energy to your Watchlist and get alerts as these catalysts play out.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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