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Trans Mountain pipeline expansion cost estimate rises to $12.6B

Last Updated Feb 7, 2020 at 9:38 pm PDT


Trans Mountain says the estimate to build the line has risen to $12.6-billion, a 70 per cent increase

The original projection was $7.4-billion

The company expects the expansion will be completed by 2022

VANCOUVER (NEWS 1130) – The estimated cost of the Trans Mountain pipeline expansion project has jumped significantly.

Trans Mountain says the estimate to build the line has risen to $12.6-billion, representing a 70 per cent increase to the original $7.4-billion projection, which was first made by the previous owner, Houston-based Kinder Morgan Inc.

“I wish I could say that’s exactly how I saw things unfolding and that the process is what I expected it to be, but obviously I can’t,” Trans Mountain President and CEO Ian Anderson says. “My only comfort is that I’m sure that there isn’t anyone that could have pictured the journey that we’ve been on for the last several years to get this project started, and what it will take to get it completed.”

Minister of Finance Bill Morneau says Canadians should get a “fair price” for its resources and argues almost all of the country’s energy exports are being sold at a discounted price to the U.S.

“Getting out resources to global markets in a way that is efficient and safe is Canada’s best interest. Construction of this Project is underway and will create thousands of good middle-class jobs in Western Canada — in construction, engineering, and finance.”

He cites comprehensive consultation with 129 Indigenous communities on economic participation and says the second wave of discussion could be underway.

The company expects the expansion will be completed by 2022, and believes the project is still commercially viable.

On Tuesday, the Federal Court of Appeal dismissed four challenges to the federal government’s approval of the expansion project for a second time. In a unanimous ruling, three judges said the government’s decision to approve the Trans Mountain project was reasonable and would stand, despite First Nations arguing at a December hearing that the government went into consultations with Indigenous communities in the fall of 2018 having predetermined the outcome in favour of the expansion.

The judges said the cabinet’s second round of consultations was “anything but a rubber-stamping exercise.”

The expansion has been a controversial topic for some time now, with opponents attacking the greenhouse gas emission and oil spill risks of the project.Some have been charged it will be a money-loser with unproved markets in Asia that will fail financially and leave the public holding the bag.

Meanwhile, Anderson says the company is recommending that Ottawa, as owner and lender, set aside a further $600 million reserve for cost impacts beyond the control of Trans Mountain.

The expansion will nearly triple the 300,000-barrel-a-day capacity of the existing pipeline, which carries crude oil and refined products from Edmonton to Burnaby Mountain.

“We’re well under construction at our terminals in Burnaby, on the water at Westridge, and at our tank terminal, and we’re on the right of way in Alberta, as you know,” Anderson says. “We had pipe in the ground in Alberta before Christmas and that progress is continuing well.”

He added all construction is expected to be underway in both B.C. and Alberta before the end of the year.

Kinder Morgan sold the expansion project and existing pipeline to the federal government in 2018 for $4.5-billion.

-With files from Ash Kelly