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Trans Mountain Expansion Could Cost More Than Expected

Oil pipeline

The Trans Mountain pipeline expansion project could end up costing more than initially estimated, documents filed with U.S. regulators by Kinder Morgan suggest, according to a Reuters report.

The document Reuters cites is a report Kinder Morgan filed with U.S. regulatory authorities following its deal with the Canadian federal government to sell it the controversial project. In it, Kinder Morgan’s financial adviser TD Securities notes that the project could incur additional costs of between US$770 million to US$1.46 billion (C$1-1.9 billion) and face a delay of up to 12 months, to December 2021.

The initial estimated capital cost of the project was US$5.67 billion (C$7.4 billion), with the estimate provided by TD Securities. Earlier this year Ottawa agreed to buy the project for US$3.45 billion (C$4.5 billion) to save it, although now it needs to find investors to sell it on to. Meanwhile, it will provide the funding necessary for restarting work on the project until the deal closes.

The Trans Mountain expansion has become one of the most controversial pipeline projects in North America as it pitted two provinces against each other, sparking both protests and support rallies.

Related: Warship Or Oil Tanker – What Did The Houthis Hit?

Alberta heavy oil producers need more pipeline capacity as their production grows but pipeline capacity stays the same. British Columbia’s new NDP government, which came into office last year, however, is against any new oil pipelines, although it doesn’t mind getting the crude it gets currently through the existing pipeline. The government has repeatedly cited higher risks of spills not just along the pipeline but at the port of Vancouver from where the crude sent via Trans Mountain should be loaded and sent to international markets.

The federal government has supported the project from day one, but its support has not been enough to put an end to the BC opposition. After months of interprovincial wrangling during which time Kinder Morgan had suspended almost all work on the project, the company gave Ottawa an ultimatum to either suggest a solution to the problem or watch Kinder Morgan walk away from the whole thing. The solution the government picked was buying the project itself and making it happen.

By Irina Slav for Oilprice.com

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