The Trans Mountain Pipeline expansion project has hit another construction-related hurdle that could delay its completion.
The crown corporation that owns the pipeline has sought regulatory approval to re-route one of the remaining stretches of the pipeline that has not yet been completed.
In its regulatory filing, Trans Mountain Corp. said it has had engineering difficulties related to tunneling in British Columbia and wants to slightly alter the route for a 1.3-kilometre stretch of pipeline, as well as the method of construction.
But the filing documents illustrate how the company faces opposition from the Stk’emlupsemc te Secwepemc nation, whose traditional territory the pipeline crosses and which had accepted the originally proposed route and construction method.
The documents state that between May and July 2023, Trans Mountain Corp. met and corresponded multiple times with First Nation leaders, who continued to express concern that the pipeline project was deviating from its previously planned route and method of construction. agreed.
In its filing, Trans Mountain Corp. said it needs the regulator to make a decision as soon as possible to avoid construction delays that could result in “significantly higher construction costs” for the project.
It also warns of costs and impacts to “various third parties who are relying on the timely completion” of the project.
The Trans Mountain Pipeline is the only pipeline system in Canada that transports oil from Alberta to the West Coast. Its expansion, which is currently underway, will increase the pipeline’s capacity to 890,000 barrels per day (bpd) from the current 300,000 bpd.
Trans Mountain Corp.’s target date for mechanical completion of the expansion project had been sometime during the third quarter of this year, with the pipeline’s commissioning date expected to be in early 2024.
However, the project has been plagued with difficulties. The pipeline was purchased by the federal government for $4.5 billion in 2018 after the previous owner, Kinder Morgan Canada Inc., threatened to scrap the pipeline’s planned expansion project in the face of environmental opposition.
Since then, its projected price has skyrocketed, first to $12.6bn, then $21.4bn, and most recently to $30.9bn (the most recent cost of capital estimate, as of March of this year).
Trans Mountain Corp. has blamed the cost overruns on a variety of factors, including inflation, COVID-19, labor and supply chain challenges, flooding in British Columbia, and significant unexpected archaeological discoveries along the way. route.
The federal government has indicated that it does not want to be the long-term owner of Trans Mountain.
On Wednesday, Prime Minister Justin Trudeau confirmed that the government is currently in talks with potential buyers. (Several indigenous-led initiatives and associations have previously expressed interest in owning the pipeline.)
“I’m very excited and interested that there are so many indigenous groups interested in buying the TMX pipeline,” Trudeau told reporters in Charlottetown.
“We are in talks with them right now, it would be premature to speculate too much about it.”
However, critics have suggested that the rising costs of Trans Mountain will mean the government will have to absorb a significant loss when it sells the pipeline. Due to the way existing contractual agreements with oil carriers are structured, only a portion of the rising capital costs of the project can be passed on to the oil companies in the form of increased tolls. (Tolls are the fees oil companies pay to move product into a pipeline, and they are the pipeline company’s way of making money.)
A Parliamentary Budget Officer report last year found that the federal government could lose money from its investment in the pipeline, and suggested that if the project were canceled at that point, the government would need to write off more than $14 billion in assets.
Trudeau said Wednesday that the pipeline remains an important project for the Canadian economy that guarantees future markets for the country’s oil and gas resources.
“We are confident that the business case for the Trans Mountain pipeline remains strong,” he said.
