Cost of Trans Mountain pipeline expansion soars 70% to $21.4 billion
CBC
An eye-popping 70 per cent increase in the projected price tag for the Trans Mountain expansion was met Friday by jeers from environmental groups and a pledge from the federal government to put no additional public money toward the project.
But Canada's oil and gas industry remains staunchly behind a project it says remains essential to the national interest, in spite of newly disclosed budget overruns that peg the new cost of the Trans Mountain expansion at $21.4 billion, up from an earlier estimate of $12.6 billion.
"We remain fully supportive of this world-class infrastructure project which is vital to Canada's long-term economic success and energy security," said Suncor Energy Inc. chief executive Mark Little, in a statement released just hours after federal Crown corporation Trans Mountain Corp. released its new cost projections for the project.
"While no one wants to see cost increases, they are often a fact of life with projects of this size and in this case were largely beyond Trans Mountain's control," said Alex Pourbaix, CEO of Cenovus Energy Inc., in a separate statement.
The 1,150 km Trans Mountain pipeline carries 300,000 barrels of oil per day, and is Canada's only pipeline system transporting oil from Alberta to the West Coast.
Its expansion, for which construction is currently underway, will essentially twin the existing pipeline, raising daily output to 890,000 barrels to support Canadian crude oil production growth and ensure access to global energy markets.
Trans Mountain was bought by the federal government for $4.5 billion in 2018, after previous owner Kinder Morgan Canada Inc. threatened to scrap the pipeline's planned expansion project in the face of environmentalist opposition.
On Friday, Trans Mountain Corp. blamed the surging cost projections for the project on the COVID-19 pandemic and the effects of the November 2021 flooding in British Columbia, as well as project enhancements, increased security costs, route changes to avoid culturally and environmentally sensitive areas, and scheduling pressures related to permitting processes and construction challenges in difficult terrain.
The company also pushed back the projected completion date to the third quarter of 2023. The pipeline expansion was originally expected to be complete sometime this year.
Following the company's update, Deputy Prime Minister Chrystia Freeland said that Trans Mountain Corp. will need to secure third-party funding to complete the project, either through banks or public debt markets.
"I want to assure Canadians there will be no additional public funding for TMC," Freeland told reporters in Ottawa, adding the government has engaged BMO Capital Markets and TD Securities to provide financial advice on the project and has been assured by both parties that the project remains commercially viable.
Freeland said the federal government still believes the Trans Mountain expansion is a "serious and necessary project."
"This project is in the national interest and will make Canada and the Canadian economy more sovereign and more resilient," she said.
Oil and gas industry representatives were quick to defend Trans Mountain on Friday, arguing the project's operators have been hit by a whammy of misfortune they could not have predicted — everything from supply chain and inflation issues triggered by COVID-19 to weather-related catastrophes like wildfires and flooding.
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