Trans Mountain pipeline construction costs balloon again, this time to $30.9B
The estimated value of the Trans Mountain pipeline growth mission has elevated as soon as once more, this time to $30.9 billion.
That’s the most recent determine from Trans Mountain Corp., the federal Crown company that owns the pipeline. On Friday, Trans Mountain Corp. blamed the most recent value overruns on plenty of components, together with inflation, labour and provide chain challenges, flooding in B.C. and sudden main archeological discoveries alongside the route.
The new price ticket is a 44 per cent enhance from the $21.4 billion value projection positioned on the pipeline growth mission a yr in the past, and greater than double an earlier estimate of $12.6 billion.
Previous value will increase have been blamed on the COVID-19 pandemic, scheduling pressures associated to allowing processes, and route modifications to keep away from culturally and environmentally delicate areas, amongst different issues.
“Canada has among the world’s highest standards for the protection of people, the environment, and Indigenous participation when building major infrastructure projects,” mentioned Trans Mountain Corp. CEO Dawn Farrell in a news launch Friday.
“By including these commitments into the Project design and development from the beginning, we have ensured the Project will provide economic benefits to Canadians well into the future.”
Trans Mountain Corp. mentioned it’s now within the means of securing exterior financing to cowl the remaining value of the mission.
The 1,150-km Trans Mountain pipeline is Canada’s solely pipeline system transporting oil from Alberta to the West Coast.
Its growth will enhance the pipeline’s capability from 590,000 barrels per day to a complete of 890,000 barrels per day, supporting Canadian crude oil manufacturing progress and guaranteeing entry to international vitality markets.
However, even earlier than the most recent value enhance, some critics have been suggesting the mission not makes financial sense.
For Trans Mountain Corp., an enormous purpose why rising prices are so problematic is that it has no option to recoup them. Due to present contractual agreements with shippers, solely 20 per cent of the elevated capital prices might be handed on to grease firms within the type of elevated tolls. (Tolls are the charges oil firms pay to shift product on a pipeline, and they’re how the pipeline firm makes cash).
A report from the Parliamentary Budget Officer final June discovered the federal authorities stands to lose cash from its funding within the pipeline, and recommended that if the mission have been cancelled at the moment, the federal government would want to jot down off greater than $14 billion in belongings.
Trans Mountain was purchased by the federal authorities for $4.5 billion in 2018, after earlier proprietor Kinder Morgan Canada Inc. threatened to scrap the pipeline’s deliberate growth mission within the face of environmentalist opposition.
The federal authorities has indicated it doesn’t want to be the long-term proprietor of Trans Mountain, and intends to launch a divestment course of after the growth mission has been “further derisked.”
Several Indigenous-led initiatives have beforehand indicated their intent to pursue possession of the pipeline.
Construction of the mission is presently near 80 per cent full, with mechanical completion anticipated to happen on the finish of this yr, and the pipeline anticipated to be in-service within the first quarter of 2024.
This report by The Canadian Press was first printed March 10, 2023.
