Trans Mountain pipeline expansion price could hit $6.8B, Kinder Morgan says
Currency swings, delays, project changes blamed for cost inflation from previous $5.4B estimate
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.
- OTHER ECONOMY NEWS | CP Rail headquarters might not be in Canada if merger with Norfolk Southern goes ahead
- OTHER ECONOMY NEWS | Calgary pipeline truckers get creative after oil downturn
- OTHER ECONOMY NEWS | Obama says it's 'not contradictory' for Alberta to extract bitumen while transitioning away from fossil fuels
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 U.S. 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 B.C. 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.