British Columbia

Environmental group presses NEB, industry to prove pipeline is economically worth it

Living Oceans Society wants proof that the 13 shippers who made commitments to move their product through the expanded Trans Mountain pipeline are still willing to do so after construction delays and increased project costs.

Living Oceans Society wants proof Trans Mountain will be used by shippers after project costs increase

An aerial view of Kinder Morgan's Trans Mountain marine terminal, in Burnaby, B.C., is shown on Tuesday, May 29, 2018. (Jonathan Hayward/The Canadian Press)

A British Columbia environmental group says construction on the Trans Mountain pipeline shouldn't begin unless the project proves to still be commercially viable.

Living Oceans Society wants the National Energy Board to require Trans Mountain prove that the 13 shippers, which include Suncor Energy Inc., Cenovus Energy Inc. and Imperial Oil Ltd., are still committed to moving their product on the pipeline now that project costs have increased.

Kinder Morgan, the pipeline's former owner, estimated the expansion would cost $9.3 billion in August 2018, up from a previous estimate of $7.4 billion. Living Oceans estimates the final cost is now somewhere between $12 billion and $15 billion, which factors in the $4.5 billion the federal government paid when it purchased the project.

Karen Wristen, executive director of Living Oceans, says project costs have gone up and construction should not start before shippers indicate they still support the project. She said it is critical for Canadian taxpayers to have that information to know if they are getting a good deal for the pipeline they own.

Karen Wristen, executive director of Living Oceans Society, says Canadians need proof shippers are willing to pay higher rates to use the Trans Mountain pipeline now that project costs have increased. (Katerina Georgieva/CBC)

"We can sell it if it's a commercially viable project and the shippers are prepared to pay rates that match up with the new cost of the project," said Wristen. "But if we're selling a project with shippers paying rates for a $7.4 billion project but it's actually a $15 billion project that's not a commercially viable asset."

Wristen said shippers agreed to pay tolls based on earlier financial projections and NEB should insist on new agreements before construction begins.

Trans Mountain President and CEO Ian Anderson said shippers continue to support the project.

"They've done their market analysis. They've looked at global supply and demand and they're in full support of the expansion,' said Anderson in a statement.

Mike LeBourdais, chief of the Whispering Pines First Nation, wants to buy a stake in the pipeline along with other First Nations which make up the Western Indigenous Pipeline Group.

He told Stephen Quinn, the host of CBC's The Early Edition he speaks weekly with shippers and they are still on board.

"They're all excited about it, increased costs or not," said LeBourdais, who said the Asia Pacific market for oil is growing even if demand appears to be levelling off in North America.

Mike LeBourdais, chief of the Whispering Pines First Nation, wants to purchase a stake in the pipeline. (CBC News)

In a statement to The Early Edition, Cenovus Energy Inc. said it "continues to be supportive of all projects that would open up access to new markets for our oil."

Joseph Doucet, dean of the Alberta School of Business, said he has "no doubt the project is still commercially viable."

Doucet said even if prices are fluctuating now, producers and shippers are looking at 20-30 year market forecasts and the outlook is good.

He said fluctuating costs now, even if they are in the billions of dollars, are "not large enough to offset the potential gains for shippers" who want this project, so they can gain access to global markets."

Wristen argued Trans Mountain last confirmed contracts with shippers in 2016 and if it has re-confirmed with them since, it has been "happening been behind closed doors."

She says Canadians should have proof all players are still willing to pay for access before shovels break ground on the pipeline expansion.

"Canadians need to know that what's being built here is going to be sellable at the end of the day," said Wristen.

To hear the complete interviews with Karen Wristen, Mike LeBourdais and Joseph Doucet, click on the audio links below:

Living Oceans Society executive director Karen Wristen speaks with Stephen Quinn. 7:46
Joseph Doucet is the dean of the Alberta School of Business in Edmonton. Mike LeBourdais is chair of the Western Indigenous Pipeline Group. They speak with Stephen Quinn. 9:50

The Early Edition, Bethlehem Mariam

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