Canada’s Trans Mountain pipeline work greenlighted for fall

(Image courtesy of Trans Mountain)

Providing there are no excessive regulatory delays, work on the Trans Mountain pipeline expansion should resume in late summer or early fall, and oil should be flowing through a new pipeline by the second or third quarter of 2022, says Ian Anderson.

The former Kinder Morgan Canada (TSX:KML) president, who is now CEO of the Trans Mountain Corporation – a Crown-owned company – spoke to the media Wednesday, June 19, one day after Prime Minister Justin Trudeau once again gave the pipeline twinning project the green light.

Work on the expansion project was halted in August 2018 by the Federal Court of Appeal.

The expansion project involves the twinning of the existing Trans Mountain pipeline, which runs 1,150 kilomtres from Edmonton to Burnaby, and the expansion of the Westridge Marine Terminal in Burnaby.

The new second line will be dedicated to crude oil, while the existing pipeline will remain a batched pipeline that can move a variety of petroleum products, including refined fuels.

Before work can recommence, Anderson said the company needs a certificate from the National Energy Board (NEB). Hundreds of permits are also needed from the province and municipalities.

“If things go according to plan, I can see shovels in the ground in September – early September”

Ian Anderson, CEO, Trans Mountain Corporation

Prior to the work being halted last year, there were a number of NEB condition filings that had to be made, variances approved, and route hearings to determine specific route locations.

“The process we’ve got to go through now with them is how to, in effect, bring forward or reinstate all of that work so we can commence again from a place we were before,” Anderson said. “That process will take, hopefully, some number of weeks, and not months, to solve.

“If things go according to plan, I can see shovels in the ground in September – early September,” Anderson said.

Timing is important, since there are seasonal construction windows that limit when the work can be done. There are, for example, migratory bird and fisheries windows the company must work within. And the season for work on the Coquihalla is short, because winter comes early and stays late at higher elevations.

Delays add to costs. Anderson confirmed that the project will likely exceed the last capex estimate of $7.4 billion, but could not say if it will come closer to the $9.3 billion that the Parliamentary Budget Officer estimated in January.

“I can give you some certainty that the number will north of 7.4 (billion) and I’ll disclose a final number in due course,” he said.

“Once there’s more certainty on that regulatory process and we know when we can get back to work, we’ll be in a better position to provide an update on both the specific schedule and project costs. As you can appreciate those two are connected.

“We all know that delays are going to push up costs. We’re also hitting a different market in terms of competing projects and access to labour.”

Indeed, the project will be competing with the $40 billion LNG Canada project for workers, which is expected to need 10,000 workers at peak construction.

The Trans Mountain twinning project will require 5,000 to 6,000 workers at peak construction, Anderson said.

Once work does begin, it will start in Burnaby, at the Westridge Marine Terminal, and on the spread west of Edmonton and east of Jasper National Park in Alberta. The next sections will be the Edmonton area and North Thompson region north of Kamloops.

About 30% of the steel pipe needed for the project has been delivered and is now being stored at sites along the route.

As part of its additional consultations with First Nations, the Trudeau government added eight accommodation measures, one of which could result in the rerouting of the section of pipeline that passes through the Coldwater Indian Band’s reserves near Merritt.

“I am committed to Coldwater to consider routing alternatives that meet our mutual interests,” Anderson said. “We have several alternatives that we’re prepared to consider.”

Should a deviation be needed, it would require NEB approval.

“Our schedule, at this stage, we don’t believe is at any risk of that determination,” Anderson said. “We have time built into the schedule to accommodate any route deviation at coldwater that we agreed to with them.”

The original commissioning date for the project was originally 2021. Anderson now estimates the new commissioning date to be the second or third quarter of 2022.

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