TC Energy’s $8.5 Billion Project Pipeline: A Strategic Play for Savings and Growth

TC Energy (TRP.TO) has unveiled an ambitious $8.5 billion portfolio of projects set to enter service in 2025, with management emphasizing a 15% reduction in costs relative to initial estimates. This strategy, underpinned by major infrastructure initiatives in Mexico, the U.S., and Canada, positions the company to capitalize on North America’s energy transition while maintaining financial discipline.

Key Projects Driving Growth

At the core of TC Energy’s 2025 plans is the Southeast Gateway Pipeline, a 715-km natural gas line linking Mexico’s Gulf Coast to key industrial and power markets. The project, completed 13% under budget, awaits final regulatory approval from Mexico’s National Energy Commission (CNE) by late May 2025. Once operational, it will supply 1.3 billion cubic feet of gas daily, supporting 10 of Mexico’s 14 planned natural gas-fired power plants, critical to the country’s goal of adding 29 gigawatts of installed capacity by 2030.

In the U.S., the Northwoods Expansion—a $900 million upgrade to the ANR pipeline system—will add 0.4 Bcf/d of capacity to serve the Midwest’s growing demand for natural gas in power generation and data centers. The project is backed by a 20-year take-or-pay contract with a creditworthy counterparty, targeting a build multiple of 5–7x (a metric reflecting capital efficiency).

Meanwhile, Canada’s Bruce Power Unit 5 Major Component Replacement (MCR)—a $1.1 billion investment—will extend the life of Ontario’s largest nuclear plant until 2064. This project, approved by the province’s Independent Electricity System Operator (IESO), aligns with TC Energy’s focus on low-emission energy sources to meet rising power demand.

Cost Savings and Financial Performance

TC Energy’s 15% savings target is already showing results. The Southeast Gateway’s under-budget completion exemplifies its ability to optimize capital allocation. Management reaffirmed 2025 Comparable EBITDA guidance of $10.7–$10.9 billion, bolstered by record operational performance:
- Canadian NGTL pipelines hit a record 17.8 Bcf/d in February 2025.
- U.S. GTN deliveries reached 3.2 Bcf/d, while Mexico’s system peaked at 4.1 Bcf/d in March.

The company also maintained its $0.85 per share quarterly dividend (annualized $3.40), reflecting confidence in cash flow stability. A shows the stock has outperformed broader Canadian equities, up 12% year-to-date, driven by its robust project execution and contracted cash flows.

Risks and Regulatory Hurdles

While TC Energy’s projects are strategically sound, risks remain. The Southeast Gateway’s in-service date hinges on CNE approval, which, if delayed, could impact near-term cash flows. Additionally, FERC rate cases for its ANR and GLGT pipelines—seeking higher transportation rates—introduce regulatory uncertainty.

Conclusion: A Balanced Play for Growth and Dividends

TC Energy’s 2025 project pipeline represents a disciplined approach to infrastructure investment, prioritizing low-risk, contracted assets. With $8.5 billion of projects tracking to 15% under budget, the company is well-positioned to deliver its 3–5% annual dividend growth target.

The Southeast Gateway’s pending in-service and Northwoods’ long-term returns underscore TC Energy’s alignment with North America’s energy transition. With 97% of EBITDA secured via rate-regulated or long-term contracts, the company offers investors a stable income stream amid macroeconomic volatility.

For shareholders, the combination of cost discipline, execution excellence, and a growing project backlog—projected to support $4 billion in new capital commitments over the next 18 months—paints a compelling picture. TC Energy’s focus on high-margin, low-risk opportunities positions it to thrive in a decarbonizing energy landscape, making it a solid long-term bet for income-focused investors.