TC Energy Advances Coastal GasLink Phase 2 Expansion, Bolstering Long-Term LNG Growth

What happened

TC Energy has advanced plans for Coastal GasLink Phase 2, which will nearly double the pipeline's capacity and is set to begin construction in 2027. This development follows a final investment decision (FID) by LNG Canada, the anchor customer for the original Coastal GasLink, which entered commercial service in late 2024 and began exporting LNG in mid-2025. The expansion leverages existing take-or-pay contracts and the strategic West Coast demand anchor, providing visibility into additional throughput growth through the end of the decade. The project aligns with North American LNG export capacity expectations that more than double between 2024 and 2028 to approximately 24.4 Bcf/d, reinforcing TC Energy's position as a key gas infrastructure provider. The market may be underappreciating the enhanced growth runway and cash flow visibility from this expansion.

Implication

The advancement of Coastal GasLink Phase 2 adds a new layer of contracted growth to TC Energy's portfolio, extending the utility-like cash flow stream beyond the initial LNG Canada ramp. With construction starting in 2027 and capacity nearly doubling, the project should contribute incremental EBITDA and free cash flow later this decade, assuming timely execution. The move reinforces the company's strategic pivot to a gas-centric midstream model, where long-term take-or-pay contracts provide downside protection. Investors should monitor project cost control, regulatory approvals, and LNG Canada's utilization rates of the expanded capacity to confirm the projected returns. Overall, the news reduces uncertainty around TC Energy's growth pipeline and justifies a continued buy rating.

Thesis delta

The Phase 2 expansion does not alter the fundamental buy thesis but reinforces it by adding a visible, contract-backed growth project to the pipeline. Previously, the thesis hinged on Coastal GasLink's initial phase and LNG Canada's ramp; now, the expansion extends the growth runway into the early 2030s. Upside potential increases as the project de-risks through FID and construction milestones.