Canada's Trans Mountain Pipeline Says Project Costs Surpass C$30.9 Billion
March 10 2023 - 4:58PM
Dow Jones News
By Paul Vieira
OTTAWA-Construction costs for a government-owned pipeline
project designed to triple the amount of western Canadian crude
destined for Asia-bound tankers has ballooned to roughly 30.9
billion Canadian dollars, or about four times the original
cost.
The Trans Mountain Corp., which operates the pipeline project on
behalf of the Canadian government, said in a Friday statement that
the total cost of increasing pipeline capacity, to nearly 900,000
barrels of crude oil per day, is $22 billion. The company said
construction is 80% complete and the expanded pipeline is expected
to come into service in the first quarter 2024.
When Canada's Liberal government purchased the pipeline project
from Kinder Morgan in May 2018 the estimated cost of the pipeline
expansion was C$7.7 billion. Canada paid C$4.5 billion for the
710-mile pipeline, which Kinder Morgan sold due to political
uncertainty regarding the project's completion.
Last year, Trans Mountain said construction costs had climbed
70% to roughly C$21 billion. Canada agreed to provide a C$10
billion loan guarantee to help secure financing, but also said the
government would no longer provide direct funding to help the
project.
In the Friday statement, Trans Mountain said the company is in
the process of securing external financing to fund the remainder of
the project. The higher costs, it added, are attributed to global
inflation and supply-chain strains, challenging terrain in British
Columbia, and unexpected archaeological discoveries, among other
things.
The Canadian Parliament's budget watchdog said last year the
government would likely record a net loss from the project once it
is sold to private-sector interests. The analysis was done when the
estimated cost to complete the pipeline was about C$21 billion,
versus the new C$30.9 billion estimate.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
March 10, 2023 16:43 ET (21:43 GMT)
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