The estimated cost of the Trans Mountain pipeline expansion has ballooned to $12.6-billion amid a series of legal and regulatory delays, but the federal Finance Minister maintains the project remains financially viable and will end up in the hands of the private sector.
Trans Mountain Corp., the Crown corporation that took over the pipeline when Ottawa bought it from Kinder Morgan in 2018, revealed a budget Friday that is 70-per-cent higher than the initial estimate of $7.4-billion. Trans Mountain says the expansion is expected to be finished and operating by December, 2022.
Finance Minister Bill Morneau, who was directly involved in the government’s negotiations to purchase the pipeline, said he’s confident the project remains on track and will eventually be sold.
“I think what’s clear, from what the company told us today, is that the project continues to be a strong project," he said.
“We went through a due-diligence process to consider how this would be commercially viable. This was in the range of considerations that we looked at.”
He noted that Trans Mountain already has contracts for about 80 per cent of the pipeline’s capacity.
The government purchased the existing pipeline and the expansion project for $4.5-billion and said it would sell those assets when the risks around the project were gone. Mr. Morneau declined to predict when that would be, nor would he speculate on whether Ottawa might sell the asset at a loss.
Mr. Morneau also repeated the government’s desire to ensure Indigenous communities are able to buy in and benefit from the pipeline.
Trans Mountain Corp. chief executive officer Ian Anderson said a “domino effect” from the construction delays pushed up the cost, as well as higher prices for materials and changes to the project over the past three years. A delay of one year, for example, costs roughly $1-billion, he said.
“Delays are money,” said Mr. Anderson, who was president of Kinder Morgan Canada before it was bought by Ottawa. “We’ve had to manage those delays as we’ve gone through the last several years. And I think right now, we’ve got the clarity to put a pin in the schedule.”
Mr. Anderson said Trans Mountain has included a contingency of $500-million to account for additional costs and delays, including from protests and civil disobedience from opponents of the project.
He added that 58 Indigenous communities have signed benefit agreements with the company.
Alberta MP Shannon Stubbs, who is the Conservative party’s natural resource critic, said the new price tag for the pipeline confirms her party’s criticism of how the Liberal government managed the issue.
Ms. Stubbs blamed Liberal policies for the pipeline not being built by the private sector in the first place. “It never had to be this way. It’s ridiculous,” she said. “Not a single tax dollar should have been spent on the Trans Mountain expansion.”
Construction work was put on hold in 2018 after the Federal Court of Appeal overturned the pipeline project’s approval by ruling Ottawa had failed to adequately consult First Nations or consider the risk to southern resident killer whales.
The government held a new round of consultations and did more work on the marine risk. Cabinet approved the expansion again last year.
This week, the Federal Court of Appeal upheld that second approval, ruling the government’s additional consultations with Indigenous communities were adequate. The Indigenous communities that filed the legal challenge are considering whether to appeal.
Crews began putting pipeline into the ground in Alberta late last year. Trans Mountain said it expects construction work to be under way along the entire route of the pipeline, which runs from the Edmonton region to a terminal in Burnaby, B.C., by the end of this year.
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