Cost of Trans Mountain expansion pipeline keeps climbing, now $30.9B
CBC
The cost of the Trans Mountain expansion project has grown to $30.9 billion, according to the Crown corporation behind the pipeline project.
Trans Mountain Corporation pointed to several factors for the cost increase, including global inflation and supply chain challenges, and severe floods in British Columbia.
It further pointed to unexpected archaeological discoveries, challenging terrain and "unexpected" water disposal costs in the Sumas Prairie.
The project's new price tag is up from its previous estimate of $21.4 billion in early 2022. A prior estimate had pegged the price at $12.6 billion.
"Canada has among the world's highest standards for the protection of people, the environment, and Indigenous participation when building major infrastructure projects," said Trans Mountain Corp. CEO Dawn Farrell in a news release 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 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 and political uncertainty.
Trans Mountain pipeline, which runs 1,150 kilometres, 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 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.
For Trans Mountain Corp., a big reason why rising costs are so problematic is that it has no way to recoup them.
Due to existing contractual agreements with shippers, only 20 per cent of the increased capital costs can be passed on to oil companies in the form of increased tolls. (Tolls are the rates oil companies pay to shift product on a pipeline, and they are how the pipeline company makes money).
A report from the Parliamentary Budget Officer last June found the federal government stands to lose money from its investment in the pipeline, and suggested that if the project were cancelled at that time, the government would need to write off more than $14 billion in assets.
The federal government has indicated it does not wish to be the long-term owner of Trans Mountain, and intends to launch a divestment process after the expansion project has been "further derisked."
Several Indigenous-led initiatives have previously indicated their intent to pursue ownership of the pipeline.
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