TORONTO: The expansion of the Trans Mountain oil pipeline will cost about C$3.1bil (US$2.3bil) more than the Canadian government-owned company running the project projected in May, in another financial setback for a project beset by spiralling expenses and years of delays.
Costs for the expansion, which involves twinning a pipeline stretching from Edmonton to Vancouver, will be 10% more than the most recent estimate of C$30.9bil, the company said in a filing with the Canada Energy Regulator on Monday.
That brings the total cost to about C$34bil, more than six times the original estimate of C$5.4bil in 2013.
The latest cost increase – this time due to construction challenges that are delaying the new line’s startup into the second quarter – marks another setback for a project that Prime Minister Justin Trudeau has expended significant political capital on.
Trudeau’s government bought the line to save the expansion project from cancellation and give Canada’s oil producers a way to sell their crude to markets in Asia, boosting prices and lessening their dependence on the United States.
The pandemic, years of labour shortages and technical challenges have caused the project’s costs to soar and required increasing government funds.
The government’s ownership of the pipeline has also dented the Liberal prime minister’s standing among environmentalists while winning him little support in the conservative oil-producing province of Alberta.
The expansion, years behind schedule, is set to go into operation in the second quarter, a delay from the previous first quarter start date, according to Trans Mountain.
Assuming a May 1 start of operation, only contracted capacity will be utilised in the first three months. — Bloomberg
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