Estimated cost of Trans Mountain pipeline rises again to $30.9 billion

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Estimated cost of Trans Mountain pipeline increases again to $30.9 billion

The Trans Mountain pipeline connects Edmonton, Alberta to the oil terminal in Burnaby, British Columbia.

The Crown corporation responsible for the Trans Mountain pipeline expansion has announced that the estimated cost of the project is now $30.9 billion. A year ago, that estimate was more like $21.4 billion.

Trans Mountain Corporation says higher costs for this project are due to inflation, supply chain issues, and flooding in British Columbia in November 2021.

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The Trans Mountain project involves the expansion of an oil transmission line between the Edmonton area, Alberta, and the marine oil terminal in Burnaby, British Columbia.

Canada's Finance Minister, Chrystia Freeland, says the federal government will not foot the bill for these cost increases.

In keeping with the commitment we made to Canadians last year, we will not invest additional public funds in this project as construction nears completion, she said in writing, adding that the federal government does not intend to retain ownership of the project in the long term and will initiate a divestiture process in due course.

The federal government has purchased the project, in 2018, for the sum of 4.5 billion dollars.

For Richard Masson, a former oil executive now affiliated with the University of Calgary's School of Public Policy, this sharp rise in the cost of building the project will make its eventual resale more difficult.

He explains that, according to the agreement reached with the oil companies that will use the pipeline to export their production, these cost overruns cannot all be offset by higher user fees.

“It is very likely that the federal government will have to write down the value of its investment significantly because it is unable to generate revenue from it. So it's a very difficult situation.

Richard Masson of the University of Calgary School of Public Policy

On the side of environmentalists, we underline the magnitude of the sums involved in this project. For Aliénor Rougeot, from the organization Environmental Defense Canada, these billions should have been invested in efficiency and energy transition, instead of being used to export fossil fuels.

“ It should be very disappointing for Canadians that the government made such an economic faux pas. It doesn't make sense and I think now is the time to admit it, that it didn't make sense, and to own up to your mistake instead of continuing to fight. x27;push,” she argues.

“It's environmental madness for biodiversity, it's madness for climate, it's madness for Indigenous rights. […] And then now, here, there are these economic costs which are added. ”

— Aliénor Rougeot, head of climate and energy programs at Environmental Defense Canada

The environmentalist also points out the irony of a situation in which flooding in Colombia Britain, which could be linked to climate change, are driving up the costs of a project that will increase the export of oil from the tar sands.

The Crown corporation Trans Mountain Corporation highlights the economic impact of the construction of this project, particularly on Aboriginal businesses, which would have benefited from a quarter of the contracts awarded to date.

By via press release, Trans Mountain also says that the project should be completed by the end of the year and the network should be operational in early 2024.

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