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‘This amended filing has been shaped by direct, on-the-ground input from Canadians across the country,’ TransCanada Corp. CEO Russ Girling said in a statement.

TODD KOROL/REUTERS

TransCanada Corp. said its Energy East pipeline will cost billions of dollars more than initially planned, a sharp escalation that comes as new carbon constraints and plunging commodity prices scuttle growth prospects in the oil sands.

The Calgary-based company said on Thursday that the capital cost for the proposed 4,500-kilometre pipeline to Canada's East Coast has increased by one-third to $15.7-billion, reflecting hundreds of route changes and an earlier decision to scrap a planned export terminal in Quebec.

"This amended filing has been shaped by direct, on-the-ground input from Canadians across the country," chief executive officer Russ Girling said in a statement.

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However, in updated documents filed with the National Energy Board, the company said the price tag could reach $19.3-billion when accounting for potential future financing costs, as well as the expense tied to increasing natural gas-pipeline capacity in Ontario and Quebec. A spokesman said the financing costs could be recouped through tolls charged to its oil-shipper customers.

Energy East is widely seen by the oil industry as the next-best option for moving landlocked Alberta crude to global markets after U.S. President Barack Obama rejected TransCanada's $8-billion (U.S.) Keystone XL pipeline earlier this year.

The Alberta-based industry has buckled as U.S. and global crude prices skidded to the mid-$30s, down from about $100 when the Energy East pipeline was first proposed.

Major producers such as Cenovus Energy Inc., Royal Dutch Shell PLC and others have shed thousands of jobs and shelved expansion projects to conserve cash, shaving as much as one million barrels a per day from the industry's long-term production outlook.

Companies also face added costs to comply with more stringent environmental rules imposed by Alberta's NDP government, including higher carbon taxes and a cap on planet-warming greenhouse gases from the sector.

Despite the downturn, TransCanada spokesman Tim Duboyce said on Thursday that Energy East remains viable and would help to replace foreign crude imports in eastern refineries while cutting crude-by-rail shipments.

Those deliveries have dropped anyway as oil prices fell. Still, the company says the pipeline's 1.1 million barrels a per day of capacity would displace the equivalent of 1,570 railcars of crude oil a per day to Canada's East Coast, while funnelling billions of dollars in tax revenues to the federal government and the provinces.

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However, the pipeline faces mounting opposition from environmentalists who insist that the regulatory process should be overhauled to assess the project's impact on climate change.

The Liberal government promised to include such a test in its review of proposed pipelines to understand whether they would facilitate oil sands production that runs afoul of the country's greenhouse-gas reduction goals.

At the recent Paris climate summit, Ottawa signed an international agreement that pledges to limit the increase in average global temperatures to well below two degrees Celsius, with an aspirational goal of keeping it to 1.5 degrees. Critics say Energy East is not compatible with those targets.

There remains considerable debate about how Canada's climate commitments translate into national climate policy.

Natural Resources Minister Jim Carr has said the Liberals would not force pipelines currently before the regulator back to "square one." Mr. Duboyce said TransCanada has received no indication that the review process will be suspended.

Earlier this year, TransCanada abandoned plans to build an export terminal on the St. Lawrence River, bowing to concerns over potential impacts on beluga whale calving grounds.

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The company now sees first oil shipments for the project commencing in the fourth quarter of 2020, pending regulatory approvals. Under the amended plan filed on Thursday, storage capacity at the project's remaining marine outlet at Saint John, N.B., would nearly double to 13 million barrels, from 7.6 million barrels previously, Mr. Duboyce said.

With a report from Shawn McCarthy in Ottawa

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