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Ottawa to end further Trans Mountain

expansion funding after 70% cost increase

WESTERN THE Canadian government said on February Columbia in November 2021, as reasons behind
CANADA 18 that it was not providing any more public the cost increase.
funding for construction of the Trans Mountain Additionally, the company has delayed the
pipeline expansion after the project’s costs had planned start-up date of the expansion by a
risen by 70%. further nine months and now anticipates that
The government bought the Trans Moun- the pipeline will be ready in the third quarter of
tain oil pipeline and expansion project from 2023.
Kinder Morgan in 2018 in a bid to save the “The progress we have made over the past
pipeline when it appeared to be at risk of being two years is remarkable when you consider the
scrapped. This came at a time when Canada’s oil unforeseen challenges we have faced including
sands producers were struggling with takeaway the global pandemic, wildfires and flooding,”
capacity shortages and major planned projects stated Trans Mountain’s president and CEO, Ian The company
were running into delays and various obstacles. Anderson. He went on to say that the company
Since then, TC Energy’s Keystone XL pipeline had managed to find solutions to the challenges has delayed the
has been scrapped, while Enbridge’s Line 3 that had arisen, and that the project was advanc-
replacement, also to the US, entered service last ing with “significantly improved” safety and planned start-
year. The Trans Mountain expansion is the last of environmental management as a result.
these major pipeline projects that have long been However, the cost escalation has prompted up date of the
under development. Ottawa to tell Trans Mountain to secure any fur- expansion by
The total cost of the expansion has increased ther necessary financing from public debt mar-
from an estimate of CAD12.6bn ($9.9bn), made kets or financial institutions. a further nine
in February 2020, to CAD21.4bn ($16.8bn), “I want to assure Canadians that there will be
the government-owned Trans Mountain com- no additional public money invested in [Trans months.
pany said this week. The fact that the project’s Mountain],” Canadian Minister of Finance
costs have escalated is no surprise, given recent Chrystia Freeland said.
delays including those related to the coronavi- The government has engaged BMO Capital
rus (COVID-19) pandemic. The Financial Post Markets and TD Securities to provide financial
reported an anticipated cost increase earlier this advice on Trans Mountain. Freeland said the
month, citing sources familiar with the project, two advisers had confirmed that the project
but underestimated the extent of the rise, saying remained commercially viable and that public
the expansion would likely cost over CAD17bn financing was a feasible option.
($13.3bn). Trans Mountain also cited project Ottawa intends to sell the project upon its
enhancements, changes, delays and financ- competition, though there have been no updates
ing, as well as the impact of flooding in British relating to this recently.™

P6 www. NEWSBASE .com Week 07 17•February•2022