Cost of Trudeau’s Pipeline Wager Balloons 70% to $9.5 billion
The cost to build Justin Trudeau’s pet oil-pipeline project just got a few billion dollars more expensive.
The price tag for the Trans Mountain expansion has increased 70% to C$12.6 billion ($9.5 billion) because of legal delays and accommodations made to indigenous communities along its route, the pipeline’s operator said Friday in an emailed statement. And that doesn’t include the C$4.5 billion Trudeau’s government spent to purchase the conduit, but it does incorporate C$1.1 billion spent by the project’s previous owner, Kinder Morgan Inc.
“Today’s Trans Mountain Expansion Project has seen significant changes, enhancements and improvements since it was originally envisioned in 2009, and first introduced to the public in 2012,” Trans Mountain CEO Ian Anderson said in the statement.
The cost increase threatens to be a political liability for the Canadian prime minister, who has disappointed some in his environmentalist base over his support for the crude-oil conduit. Trudeau’s government made the unusual move of buying a pipeline as Canada’s oil industry struggles with a shortage of infrastructure to ship crude from Alberta’s oil sands, which hold the world’s third-largest reserves.
The project would boost daily shipping capacity by 590,000 bbl, to a total of 890,000 bbl, helping relieve a transport bottleneck that has weighed on Canada’s oil industry. The pipeline, which runs from Edmonton to a shipping terminal near Vancouver, also may help develop new markets for the country’s crude in Asia.
Producers that are currently committed to shipping their crude on the expanded line include Suncor Energy Inc., Cenovus Energy Inc., Athabasca Oil Corp., MEG Energy Corp., Husky Energy Inc., a unit of PetroChina Co. and Imperial Oil Ltd., Anderson said on a conference call. Its expected to be in service by December 2022.
Finance Minister Bill Morneau has scheduled a press conference for this afternoon in Ottawa.