Trans Mountain price tag rising on currency swings, project changes, delays
Kinder Morgan expects costs to rise from an initial price tag of $5.3 billion to more like $6.8 billion.
CALGARY — It looks like the Trans Mountain expansion is getting more expensive.
Kinder Morgan, the company behind the pipeline project, doesn’t yet have a formal estimate of how the price tag has changed since its regulatory application was filed in December 2013.
Back then, the company was expecting a cost of $5.4 billion and its estimates for the economic impacts of the project were based on that number.
But on a conference call with analysts and investors last month, Kinder Morgan Canada president Ian Anderson said it’s looking more like $6.8 billion – a figure that took into account where the loonie was trading against the US dollar on that particular day.
Anderson said foreign exchange swings were one factor behind the increase, but so were scope changes to the project – and delays.
Trans Mountain spokeswoman Ali Hounsell says the company will be able to pin down a more accurate figure once it knows what conditions may be attached to a federal permit if it’s approved.
“It’s absolutely still a viable project. We’re confident that our shippers are still very much interested and that this pipeline capacity that we’re proposing is in high demand,” she said.
The Trans Mountain pipeline has for decades shipped various petroleum products from the Edmonton area to the Vancouver area and to Washington state. The expansion project would nearly triple its capacity, enabling oilsands crude to be shipped to lucrative Asian markets.
The project has faced pushback in the BC Lower Mainland, much of it related to concerns over increased oil tanker traffic moving through the Burrard Inlet.
Customers have the ability to back out of their contract to ship crude on the pipeline if the cost goes over $6.8 billion or the regulatory approval is pushed past the end of 2017.
On the Oct. 21 call, Anderson said he’s not hearing any negative feedback from customers.
“We’re well within the bounds of all the contract commitments we have, both from a cost standpoint and a timing standpoint,” he said.
The National Energy Board expects to make a recommendation to the federal government by May 2016.
Hounsell said there have been some changes to the project along the way that could affect its final price, such as deciding to tunnel through Burnaby Mountain, thicker pipe and routing changes.
The new Liberal government has said it wants to make changes to the way in which the National Energy Board conducts its environmental reviews for pipelines.
But earlier this week, Natural Resources Minister Jim Carr told reporters the ongoing reviews of the Trans Mountain Expansion and TransCanada Corp’s Atlantic-bound Energy East proposal are moving forward.
© 2015 The Canadian Press