Cost of Trans Mountain pipeline balloons to nearly $31-billion

The expected price tag of the Trans Mountain pipeline expansion has increased once again, now projected to hit almost $31-billion.

The latest estimate of $30.9-billion, released by Trans Mountain Corp. on Friday, is an increase of more than 300 per cent from the initial $7.4-billion that former owner Kinder Morgan Canada Inc. laid out in 2017. Now close to 80-per-cent complete, the pipeline is expected to come into service in the first quarter of 2024.

In a statement Friday, the Crown corporation attributed the cost increase to high global inflation and supply chain challenges, unprecedented floods in British Columbia, unexpected water disposal costs and the challenging terrain between Merritt and Hope, B.C.

Earthquake standards in the Burnaby Mountain tunnel and “significant cost increases associated with building major infrastructure in densely populated areas from Sumas to Burnaby” also played a role, it said.

Ottawa’s Trans Mountain purchase no longer projected to be profitable, PBO says

So, too, did unexpected and significant archeological discoveries throughout sacred spaces in the Lower Mainland, which resulted in more than 83,000 artifacts being returned to Indigenous communities for cultural protection.

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. It was bought by the federal government for $4.5-billion in 2018. The expansion will raise daily output to 890,000 barrels.

The Crown corporation took over the pipeline when Ottawa bought it from Kinder Morgan in 2018, after the company threatened to scrap the expansion project in the face of environmentalist opposition.

In 2020, the expected price of the expansion jumped to $12.6-billion.

Last year, the federal government said that no more public funds would be spent on the project after the cost ballooned once again, to $21.4-billion, and completion was delayed until late 2023.

Finance Minister Chrystia Freeland told media at the time that instead of public cash, Trans Mountain would secure the funding necessary to complete the project through third-party financing, either in public debt markets or from financial institutions.

Trans Mountain said Friday it is in the process of securing external financing to fund the remaining cost of the project.

Eighty per cent of capacity on the expanded pipeline has been spoken for by a mix of 11 Canadian and international producers and refiners under long-term, take-or-pay transportation contracts for 15 and 20 years. The remaining 20 per cent will be available through market mechanisms.

Trans Mountain said it plans to deliver oil to its Westridge Marine Terminal in Burnaby during the first quarter of 2024.

The Alberta portion of the project is complete, as well as all pump stations across both provinces.