TC Energy Bullish on U.S. Despite Trade Tensions

TC Energy Corp., the Canadian pipeline giant, is doubling down on the U.S. market despite escalating trade tensions between the two countries. CEO François Poirier recently stated that the company remains bullish on the U.S., citing favorable regulatory conditions and a pro-energy stance from the Trump administration. This strategic shift comes as TC Energy forecasts a 40 billion cubic feet per day increase in North American natural gas demand over the next decade, positioning the company to capitalize on growing market opportunities.

A Pro-Energy Administration

Poirier highlighted the Trump administration's pro-energy policies as a significant factor in TC Energy's decision to focus on the U.S. market. "This is the most energy-literate incoming administration in the last 50 years," he said, noting that the administration's message to the private sector is to "figure out a way to move faster, and we will remove obstacles that will allow you to do that." This supportive stance is expected to streamline the permitting process and reduce regulatory barriers, making it easier for TC Energy to build and expand its natural gas pipeline infrastructure.

Risk-Adjusted Returns and Regulatory Environment

The U.S. market offers better risk-adjusted returns and more certain timelines compared to Canada, according to Poirier. He stated, "Right now, the risk-adjusted returns and the certainty of timelines are better in the U.S." This is due in part to Canada's regulatory system, which contains more barriers and poses more risk to project developers than the U.S. permitting system. By focusing on the U.S. market, TC Energy aims to mitigate these risks and ensure the success of its projects.



Growing Natural Gas Demand

TC Energy's decision to focus on the U.S. market is also driven by the forecasted growth in natural gas demand. The company expects demand to increase by 40 billion cubic feet per day over the next decade, creating opportunities for expansion. By expanding its natural gas network in the U.S., TC Energy aims to meet this increased demand and capitalize on the growing market opportunities. This expansion strategy is part of TC Energy's natural gas-focused strategy, which includes spinning off its oil pipeline business to concentrate on natural gas infrastructure.

Mitigating Risks

Despite the volatility and uncertainty in the current trade situation, TC Energy is taking specific measures to mitigate risks and ensure the success of its U.S. projects. These measures include focusing on the U.S. market, leveraging the pro-energy stance of the Trump administration, expanding its natural gas network, and prioritizing risk-adjusted returns. By taking these measures, TC Energy is positioning itself to navigate the challenges posed by trade tensions and regulatory uncertainties, ensuring the success of its U.S. projects.

Conclusion

TC Energy's decision to focus on the U.S. market, despite escalating trade tensions, is a strategic move that aligns with its long-term growth strategy and risk management approach. By leveraging the pro-energy stance of the Trump administration, prioritizing risk-adjusted returns, and capitalizing on growing natural gas demand, TC Energy is positioning itself to succeed in the U.S. market. This strategic shift is expected to drive the company's growth and ensure its success in the years to come.