Trans Mountain project costs 'reasonably and justifiably incurred:' Crown corporation

The Canadian Press

The company building the Trans Mountain pipeline has submitted evidence to support its claim that oil companies must pay more in tolls in light of the pipeline project's mounting costs.

Trans Mountain Corp. says in a new regulatory filing that the increased costs of the pipeline expansion project were "reasonably and justifiably incurred."

The Crown corporation has successfully applied for permission to charge oil shippers higher tolls once the pipeline expansion is operational, but only on an interim basis until the Canada Energy Regulator makes a final decision.

Trans Mountain Corp. wants to charge oil companies a benchmark toll that is nearly twice the amount of a 2017 estimate, as it seeks to recoup some of the pipeline expansion project's spiralling capital costs.

The pipeline project, which is more than 97 per cent complete, has gone from a 2017 construction cost estimate of $7.4 billion to a most recent estimate of $30.9 billion.

Trans Mountain Corp. said in written evidence submitted Friday to the regulator that the project was affected by "extraordinary" factors including evolving compliance requirements, Indigenous accommodations, stakeholder engagement and compensation requirements, extreme weather and the COVID-19 pandemic.

This report by The Canadian Press was first published Dec. 18, 2023

Trans Mountain warns regulator of potential 

'catastrophic' two-year pipeline delay

Amanda Stephenson, The Canadian Press 

The company building the Trans Mountain pipeline expansion is warning the project's completion could be delayed by two years if the Canada Energy Regulator does not allow a previously rejected request for a pipeline variance.

In a regulatory filing Thursday, Trans Mountain Corp. said such a delay would be "catastrophic" for the pipeline project, which is currently more than 97 per cent complete. It said a delay of that length would result in billions of dollars of losses for the company, which is a Crown corporation.

"These outcomes would not be in the public interest," the filing states.

The development is just the latest in a series of hurdles Trans Mountain Corp. has faced as it races against the clock to finish its massive pipeline construction project.

The Trans Mountain pipeline is Canada's only oil pipeline to the west coast, and its expansion will boost the pipeline's capacity to 890,000 barrels per day from 300,000 bpd currently. 

The project's completion, which had been expected in early 2024, is eagerly awaited by this country's energy industry, which will benefit from improved access to export markets. 

The pipeline expansion is also expected to reduce the Western Canada Select differential, which is a term for the discount Canadian oil companies typically take on their product in part due to lack of export capacity.

But the pipeline project has run into construction difficulties in its home stretch. Trans Mountain Corp. has already had to alter the route slightly near Kamloops, B.C. due to difficulty drilling a tunnel.

The newest challenges are related to hard rock conditions. In October, the Crown corporation asked the regulator to allow it to use a different diameter, wall thickness and coating for a 2.3 kilometre stretch of pipeline to make construction easier, but the regulator denied that request earlier this month.

Now, Trans Mountain says it has reason to believe that proceeding with the current construction plan through complex hard rock conditions could compromise a borehole and result in the failure of drilling equipment. 

It is once again requesting that it be allowed to alter the type of pipe used, saying the risks of continuing are "more serious and acute than previously understood."

In an email Friday, Canada Energy Regulator spokeswoman Ruth Anne Beck said a decision-making process and timeline for Trans Mountain's latest request is still being determined.

Trans Mountain has asked the regulator to make a decision before Jan. 9 in order to prevent unnecessary delays.

The federal government purchased the Trans Mountain pipeline in 2018 in an effort to get the expansion project over the finish line after it was scuttled by previous owner Kinder Morgan Canada.

The project's costs have spiralled through the course of construction from an original estimate of $5.4 billion to the most recent estimate of $30.9 billion.

Trans Mountain Corp. has said that if the pipeline doesn't begin shipping oil in early 2024 as expected, it will incur lost revenues to the effect of approximately $200 million per each month of delay.

This report by The Canadian Press was first published Dec. 15, 2023.