Feds say the company must find other financing for the now-21.4 billion project
By Laura Keil
Trans Mountain will be re-tendering Spread 4A in the North Thompson region for the Trans Mountain Expansion Project “to seek cost certainty, increase productivity and to ensure schedules are met” a spokesperson said. Terrain of this portion of the Expansion Project includes sections of wetlands, rivers and streams, rocky and mountainous terrain, steep slopes, and numerous areas with access limitations.
Ledcor-Sicim remains the contractor for spread 3.
Trans Mountain announced Feb 18th that the expansion project to twin the existing pipeline and triple its capacity was now budgeted at 21.4 billion, up 8.8 billion from the last estimate. The timeline for projected “mechanical completion” was pushed to the third quarter of 2023. The last estimate was the end of 2022.
The federal government said with 50 per cent of the pipeline already built and the project “significantly de-risked” it will not pledge any further tax dollars on the Trans Mountain pipeline expansion, but rather direct TMC to secure private funding.
Deputy Prime Minister Chrystia Freeland said Trans Mountain Corp.—the Crown corporation that owns the pipeline running from Alberta to B.C.’s coast—will need to secure third-party funding to complete the project, either through banks or public debt markets.
Freeland said business analyses by BMO Capital Markets and TD Securities on the project confirm that public financing is a feasible and prompt option.
“They have also confirmed that, despite the increased cost estimate and completion timeline, the project remains commercially viable.”
The existing 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.
Freeland said there remains “strong interest” from prospective purchasers as the project is underpinned by 20-year shipping contracts. She confirmed the government does not intend to stay on as the long-term owner.
“The federal government intends to launch a divestment process after the expansion project is further de-risked and after economic participation with Indigenous groups has progressed,” she said.
In a news release, Trans Mountain blamed the cost increases on the COVID-19 pandemic and the effects of the November 2021 flooding in British Columbia ($3.1 billion), as well as project enhancements ($2.3 billion), scheduling pressures pertaining to construction challenges in difficult terrain ($2.6 billion), route changes, and safety and security ($500 million).
“The progress we have made over the past two years is remarkable when you consider the unforeseen challenges we have faced including the global pandemic, wildfires, and flooding,” said Ian Anderson, President and CEO of Trans Mountain Corporation. “At every step of the way, we have found solutions and responded. As a result, the project is advancing with significantly improved safety and environmental management, and with a deep commitment to ensure this project is being built the right way.”
The pipeline was bought by the federal government for $4.5 billion in 2018, after previous owner Kinder Morgan Canada Inc. threatened to scrap the expansion project in the face of environmental opposition.
Since then, the Crown corporation has touted its many signed benefit agreements with First Nations and the fact many of its employees and contractors are Indigenous.
Anderson said Canada will benefit from the billions in taxes and royalties to the federal and provincial governments through the construction and operation of the pipeline over the next 20 years. He said Trans Mountain will also make payments of $25-$50 million annually to the BC Clean Communities program to fund local environmental projects.
Also on Friday, Trans Mountain announced Anderson’s retirement, effective April 1.
“Ian led a project that continues to progress while setting new standards for major pipeline project execution, including unprecedented levels of involvement from Indigenous Peoples and communities,” board chair William Downe said in a news release. “On behalf of the board, we wish Ian only good things as he leaves us.”