Tar Sands Pipelines Are Heavily Financed by 26 Key Banks

by Tim Donaghy

May 31, 2017

Twenty-six banks are the primary sources of credit for the companies building three pipelines aiming to move Canada’s tar sands to market. Greenpeace is releasing research showing the connections between these banks and the pipelines that could facilitate the expansion of one of the world’s dirtiest energy sources.

Twenty-six key banks are lending money to the companies building the following tar sands pipelines:

  • TransCanada’s proposed Keystone XL pipeline
  • Enbridge’s proposed replacement and expansion of the existing Line 3 pipeline
  • Kinder Morgan’s proposed expansion of the existing Trans Mountain pipeline
  • [A fourth proposed pipeline, TransCanada’s Energy East project, was recently cancelled.]

All three pipelines begin in Alberta’s tar sands producing region and seek to transport that crude oil south to refineries on the U.S. Gulf Coast, or east and west to coastal shipping terminals. The land-locked tar sands are currently hamstrung by a lack of pipeline capacity, and the construction of these three pipes could lead to their expansion — with dire consequences for communities along their path, and the global climate. [If you need a refresher on some of the technical terms used here, read our Finance 101 summary.]

Data collected from the Bloomberg Business Terminal (current as of October 18, 2017) shows that these three pipeline companies — TransCanada, Enbridge and Kinder Morgan — receive billions of dollars of financing via a number of term loans and revolving credit facilities. All of the following credit facilities are for general corporate finance, except one project loan organized specifically to finance Kinder Morgan’s Trans Mountain pipeline.

TransCanada (total credit $5.72 billion)

  • $1 billion revolving credit, maturity date December 15, 2017, lead agent JPMorgan Chase
  • $500 million revolving credit, maturity date December 15, 2017, lead agent JPMorgan Chase
  • $2 billion revolving credit, maturity date December 15, 2018, lead agent Bank of Montreal
  • $2.22 billion revolving credit, maturity date December 16, 2021, lead agent Bank of Montreal

Kinder Morgan (total credit $10.07 billion)

  • $1 billion term loan, maturity date January 26, 2019, lead agent Barclays
  • $5 billion revolving credit, maturity date November 26, 2019, lead agent Barclays
  • $4.07 billion revolving credit, maturity date June 16, 2022 (for three tranches), lead agent Royal Bank of Canada. This credit facility is a project loan specifically to finance the Trans Mountain pipeline.

Enbridge (total credit $12.24 billion)

  • $625 million revolving credit, maturity date June 29, 2018, lead agent JPMorgan Chase
  • $950 million revolving credit, maturity date July 27, 2018, lead agent Royal Bank of Canada
  • $2.22 billion revolving credit, maturity date July 29, 2018, lead agent Bank of Nova Scotia
  • $1.3 billion revolving credit, maturity dates August 3, 2018 and 2019 (for two separate tranches), lead agent Toronto Dominion Bank
  • $650 million term loan, maturity date May 19, 2019, lead agent BNP Paribas
  • $300 million term loan, maturity date May 19, 2019, lead agent Bank of Tokyo – Mitsubishi UFJ
  • $1.26 billion revolving credit, maturity date July 26, 2019, lead agent Toronto Dominion Bank
  • $1.11 billion revolving credit, maturity date August 3, 2019, lead agent Bank of Montreal
  • $2 billion revolving credit, maturity dates September 26, 2019 and 2020 (for two separate tranches), lead agent Bank of America
  • $1.83 billion revolving credit, maturity date August 3, 2020, lead agent Toronto Dominion Bank

[Note: A term loan is for a specified amount, interest rate, and repayment schedule, whereas a revolving line of credit makes funds available up to a maximum amount and can fluctuate month-to-month as funds are drawn down and repaid. Maturity dates indicate when the credit must be repaid or renewed.]

Numerous banks contribute money to these 17 credit facilities and the lead agent bank is responsible for organizing those lenders, performing due diligence on the terms of the loan, and doing the paperwork to finalize the deal. For this analysis, we excluded loans specifically used for acquisitions and loans to subsidiaries that specialize in natural gas pipelines. For most loans, it was not made public how much each bank is lending to each credit facility, so it is not possible to report total tar sands financing amounts for each bank. We have identified the top 26 banks who are most active in tar sands finance, either acting as a lead agent or participating in 4 or more of the 17 loans. Twenty of these banks (denoted with an asterisk *) are financing all four tar sands pipelines.

These 26 banks include five U.S. banks:

  • JPMorgan Chase (headquartered in New York City, NY)*
  • Wells Fargo (San Francisco, CA)*
  • Bank of America / Merrill Lynch (Charlotte, NC)*
  • Citibank (New York City, NY)*
  • Morgan Stanley (New York City, NY)

Nine Canadian banks:

  • Royal Bank of Canada (headquartered in Toronto)*
  • Bank of Nova Scotia / Scotiabank (Toronto)*
  • Toronto Dominion / TD Bank (Toronto)*
  • Canadian Imperial Bank of Commerce / CIBC (Toronto)*
  • Bank of Montreal (Montreal)*
  • National Bank of Canada (Montreal)*
  • Export Development Canada (Ottawa)
  • Caisse centrale desjardins (Lévis)*
  • Alberta Treasury Branches (Edmonton)*

And twelve other banks from around the world:

  • Deutsche Bank (headquartered in Frankfurt, Germany)*
  • Barclays (London, UK)*
  • HSBC Bank (London, Hong Kong)*
  • Bank of Tokyo Mitsubishi UFJ / MUFG (Tokyo, Japan)*
  • Mizuho Bank (Tokyo, Japan)*
  • Credit Suisse (Zurich, Switzerland)*
  • BNP Paribas (Paris, France)
  • Credit Agricole (Montrouge, France)*
  • Sumitomo Mitsui Bank / SMBC (Tokyo, Japan)*
  • DNB Capital / ASA (Oslo, Norway)
  • Societe Generale (Paris, France)
  • Bank of China (Beijing, China)

[Other banks who have participated in at least one tar sands credit facility are the following: UBS, SunTrust, Natixis, ING Bank, BBVA Compass, Regions Bank, US Bank, Branch Banking & Trust, Bank Hapoalim B.M., United Overseas Bank Ltd., China Construction Bank, China Merchants Bank, Huntington National Bank, Industrial and Commercial Bank of China, State Bank of India, Canadian Western Bank, FIPPGV/PX (Investments) Ltd., and Siemens.]

Sixteen of the loans described here are for “general corporate purposes” and these companies may seek out additional forms of financing to move forward with these pipelines. For example, banks may raise money by issuing bonds or by offering equity, as Kinder Morgan has done with its Trans Mountain Initial Public Offering (IPO). The pipeline companies may also seek out “project loans” to help finance the construction of these specific pipelines (as Kinder Morgan has done, and as Energy Transfer Partners did with the Dakota Access Pipeline).

We will periodically update this information.

 

Tim Donaghy

By Tim Donaghy

Tim Donaghy is a Senior Research Specialist with Greenpeace USA. He writes frequently about climate change, offshore oil drilling, energy production, and the Arctic.

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