EDMONTON—The cost of expanding the federally owned Trans Mountain pipeline has gone up by 70 per cent, reaching $12.6 billion — but despite criticism from across the political spectrum, Justin Trudeau’s government is betting the project will be worth it, a political observer says.
Three years ago, the estimated price for the expansion had been $7.4 billion. The new, significantly higher cost was revealed Friday.
Ian Anderson, president and CEO of Trans Mountain Corp., said during a conference call the federally owned project’s new completion date is expected to be December 2022.
“It’s really important to know that the project that we’re all working on and building today is not the project that we originally envisioned and introduced early in 2012,” Anderson said.
“Nor is it the one we last provided a cost estimate for in early 2017. It isn’t even the one we envisioned as early as 2018, when our ownership changed. It’s much, much more today.”
The new cost doesn’t include the $4.5 billion spent by federal Liberals to purchase the project from its previous owner, Kinder Morgan Inc., in 2018.
Anderson cited delays for the cost. Just this week, the project survived a court challenge as the Federal Court of Appeal dismissed challenges from several First Nations. Activists in British Columbia have pledged to continue fiercely opposing the project, even though construction has already begun in Alberta. The four First Nations who lost the court challenge Tuesday have 60 days to seek leave to appeal to the Supreme Court of Canada.
Another chunk of the cost has been due to better leak-detection measures being added and thicker pipe in some spots, Anderson said.
The biggest single factor in the increase, however, was an extra $1 billion in the “cost of financial borrowing,” he said. Anderson noted said the estimate includes a $500-million contingency fund for unexpected delays that include potential disruption from protesters.
The corporation has spent $2.5 billion on the project so far.
Lori Williams, a policy studies professor at Mount Royal University in Calgary, called it a “tricky” file for Finance Minister Bill Morneau to manage even as he’s appeared confident that the project will be a net benefit for Canada.
The minister will get criticism from the Conservatives, but ultimately they’re likely to support him on any vote in Parliament on the project. The NDP and Greens in opposition will hammer him on the file, she said, and criticism could come from within his own caucus as well.
“It’s definitely going to be challenging,” Williams said. “I don’t think it’s going to be front-page news — I think we’re probably going to come back and look at this when the pipeline is built, when we see some of the economic benefits … and we’re not going to see that, in all likelihood, before the next election.”
Expanding the existing pipeline, which extends from just outside Edmonton to Burnaby, B.C., would increase the capacity output by 300,000 barrels to 890,000 per day. The project, when completed, could mean new business opportunities in Asia for Canada’s energy industry.
It’s long been lauded in Alberta as a crucial project for the struggling oil and gas industry in the province that’s home to the world’s third largest oil reserves. Alberta Premier Jason Kenney and his NDP predecessor, Rachel Notley, have consistently taken the Trudeau government to task with demands that it finish the job after years of delays.
Alberta Finance Minister Travis Toews spoke to his federal counterpart, Morneau, on Friday and was assured that Alberta didn’t have to provide funds toward the project, said spokesperson Jerrica Goodwin in an emailed statement to the Star.
Meanwhile, on Parliament Hill, opposition MPs seized on the ballooning construction cost to criticize the Liberal government.
NDP MP Peter Julian called the expansion project and government nationalization of the existing pipeline “the largest fossil fuel subsidy in Canadian history.”
Julian said the government should cancel the project — which is already under construction with 3,000 workers on the job, according to the finance minister — and keep the existing pipeline as it is.
“We’re saying don’t throw good money after bad,” Julian told reporters outside the House of Commons.
“We’re in a climate emergency. The federal government isn’t making the investments that need to be made to transition us to a clean energy economy.”
Shannon Stubbs, a Conservative MP from Alberta, argued the government created a situation that discouraged the pipeline’s original owner — Texas-based oil giant Kinder Morgan — from investing in Canada. That forced Ottawa to step in and spend taxpayer funds to buy the pipeline “unnecessarily.”
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The Conservatives strongly support pipeline construction, and Stubbs called on the government to “immediately” sell Trans Mountain to the private sector to avoid dumping more public money into its construction.
“Now the Liberals have overpaid, bought this pipeline that will cost more than they originally predicted — which we have always warned against — so now they have to figure that out, fix their own mess and tell Canadians exactly how they’re going to get it done,” Stubbs said.
With files from The Canadian Press.