Oil begins moving on Canada’s $34B Trans Mountain pipeline expansion, Smith calls it ‘monumental’

“Trans Mountain has demonstrated that challenging, long linear infrastructure can be built in Canada,” said Trans Mountain Corp. CEO Dawn Farrell in the statement.

“With our project management team and contractors, we were able to build 988 kilometres of new pipeline, 193 kilometres of reactivated pipeline, 12 new pump stations, 19 new storage tanks, and three new berths at Westridge Marine Terminal in Burnaby.”

“This is a great day for Canada, to get this pipeline up and running,” said Jon McKenzie, CEO of Cenovus Energy Inc. on a conference call with analysts Wednesday morning.

“The people of Canada are going to see the benefit for a long period of time in terms of increased taxes and royalties and the like.”

Alberta Premier Danielle Smith also hailed the milestone, saying in a news release that the expanded pipeline means “a new era of prosperity and economic growth.”

“The completion of TMX is monumental for Alberta,” Smith said.

“For Alberta this is a game-changer. The world needs more reliably and sustainably sourced Alberta energy, not less.”

The Trans Mountain pipeline expansion project involved twinning an existing pipeline that runs from Alberta to the B.C. coast. The expansion increases the Trans Mountain system’s shipping capacity from 300,000 barrels per day to 890,000 barrels per day, and will help open up global export markets for Canadian oil.

The increased capacity is also expected to help improve the price Canadian oil companies receive for their product.

But while the project’s completion is being hailed by Canada’s energy sector as a win, it did not come easily.

The pipeline expansion was first proposed in 2012 by Kinder Morgan Canada, which encountered so much environmental and Indigenous opposition that it ultimately threatened to scuttle the project.

The federal government purchased the pipeline for $4.5 billion in 2018 in an effort to get the project over the finish line. Once construction did start, the project ran into numerous delays and budget overruns, with its price tag spiralling over the course of four years to an eye-popping $34 billion.

Cenovus’ McKenzie said Wednesday he didn’t want to taint “a great day” with too much talk of the project’s challenges. But he suggested the difficulties encountered by Trans Mountain are indicative of a broader problem.

“I think as a nation we suffer — and I don’t think I’m saying anything that people don’t already know — from lower and decreasing productivity, and we need to find ways to get major projects built to get infrastructure built to the benefit of all Canadians,” McKenzie said.

“And I think we would all realize that 13 years is far too long for a project of this national importance to get built.”

The cost and challenges associated with building Trans Mountain also cast a shadow over its ultimate sale. The federal government has indicated it does not wish to be the long-term owner of the pipeline, but the expansion project’s ballooning price tag means experts say the government will likely have to take a significant writedown if it is able to sell the asset.

The Trans Mountain saga has also left some wondering whether an oil pipeline will ever again be built in this country.

Industry watchers say the Trans Mountain expansion will reach its maximum capacity within just a handful of years, thanks to increased oil output by Canadian producers. But the time, cost and regulatory burden associated with building a similar project would be major investment barriers.

“It is increasingly difficult to build pipelines in this country, and it wouldn’t surprise me if this was the last pipeline,” McKenzie said.

“But the reality is we have a tremendous resource here in Canada and we produce our oil in my view, more sustainably than probably anywhere else in the world. And if we were in a position where, as a nation, we decided to take that to market, we should be building more pipelines.”

Alberta NDP Leader Rachel Notley issued the following statement in response to the completion of the Trans Mountain Pipeline expansion:

“Good construction jobs – 35,000 of them; a better return on our resources; diversification of our markets; significantly increasing product to tidewater for the first time in a generation. For all of this, we celebrate today’s notable completion and commencement of operations of the Trans Mountain pipeline.

“Most importantly, today is a reminder that we can do big, seemingly impossible things when we come together.

“Getting TMX over the finish line hasn’t been easy. No government before ours was able to do it, and there are still skeptics who wonder how such a thing could be done. But Albertans know they deserve full value for their resources, not to mention the good jobs, both in its construction and operation, that will result from it. That’s why we were proud to champion this project then and now, because it’s in the best interests of Albertans and our fellow Canadians.

“Everyone in this country is concerned about the cost of living crisis and how to ensure governments have the necessary revenues to fund the incredibly important services we all rely on like healthcare and education. Now more than ever it’s vital we champion Alberta as a place where big ideas can actually succeed, for the betterment of us all.

“Let’s also be clear that the endlessly oppositional relationship with the rest of Canada currently demonstrated by the UCP, where complex policy challenges are reduced down to empty partisan sniping, would have ensured that this nation-building and province-growing project simply never would have happened.

“Alberta needs the same level of collaboration we brought to getting TMX to the finish line to now drive collective efforts to reduce the amount of carbon in a barrel. As we work towards achieving a net-zero future, these jobs, and the communities they support, depend upon it.”

by The Canadian Press

Oil begins moving on Canada’s $34B Trans Mountain pipeline expansion, Smith calls it ‘monumental’

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