Trans Mountain Pipeline Costs Balloon to $30.9 Billion, Some Costs Excluded From Calculations: Memo

Pipeline pipes are seen at a Trans Mountain facility near Hope, B.C., Aug. 22, 2019. (Jonathan Hayward/The Canadian Press)

Estimated costs continue to climb for the taxpayer-owned, over-budget Trans Mountain Pipeline still under construction. The last count comes in at a project cost of $30.9 billion; however, according to a Natural Resources Canada memo, the latest calculations might not include the total expenditure.

Additional subsidies were excluded from calculations used in supporting cabinet’s claim that “no more public money will be used to complete the Trans Mountain Expansion,” according to Blacklock’s Reporter on July 26.

In 2020 cabinet accounted for expansion costs at $13.2 billion, which was later revised to $21.4 billion. Earlier this year, Trans Mountain announced that project costs had ballooned to $30.9 billion—significantly higher than the $4.5 billion the federal government paid Kinder Morgan Canada for the existing Trans Mountain pipeline, expansion project, and terminals in 2018.

Heavy equipment on the site of the Trans Mountain pipeline expansion project at the company's Burnaby Terminal tank farm in Burnaby, B.C., on March 10, 2021. (Darryl Dyck/The Canadian Press)

The expansion of the pipeline is predicted to nearly triple the flow of crude oil to 890,000 barrels a day. In June, the federal government put in an application to the Canada Energy Regulator to approve an interim version of toll charges that will be levied against the oil sands industry when the pipeline is finally operational. The pipeline is predicted to open in the first quarter of 2024, but it isn’t expected tolls will cover the costs.

A March 1 Supplementary Estimates memo said the “newly revised cost estimate of $30.9 billion and construction timeline of late 2023 is due to a number of factors including global inflation and supply chain pressures.”

“No additional public money will be invested in this project as construction is completed. The government stands by its commitment that no more public money will be used,” said a Department of Natural Resources memo.

Costs Not Included

However, other funds spent for related costs like indigenous engagement are not included, as the department said those costs were not for construction. The project includes $32 million to address “concerns raised by Indigenous groups regarding the Trans Mountain Expansion project.”

“This funding is not for the Trans Mountain Expansion construction,” said the memo. “This funding is to continue to deliver on the government’s Indigenous accommodation commitments and to address potential impacts to Indigenous rights.”

Those funds came from five different sources: Natural Resources, Fisheries, Transport, Environment, and the Canadian Coast Guard.

To date, cabinet has not provided a total figure on all taxpayer-paid costs for the pipeline, despite a request made by Calgary Conservative MP Greg McLean. “We'd like to see where all the money went,” Mr. McLean told the Commons natural resource committee.

Steel pipes to be used in the oil pipeline construction of the Canadian government’s Trans Mountain Expansion Project lies at a stockpile site in Kamloops, B.C., on June 18, 2019. (Dennis Owen/Reuters)

One opponent of the pipeline called it a “financially dangerous boondoggle,” in 2022. Julia Levin, a spokesperson for Environmental Defence, a climate activist group, said “there will be no profits, only financial losses for Canadians.”

The Canadian government has committed to providing funding of up to $3 billion for Trans Mountain Corp’s (TMC) oil pipeline expansion to Canada’s Pacific Coast, according to Export Development Canada (EDC).

The EDC indicates two new loan guarantees have been signed by the government, one in late March and one in early May 2023. Last year, the government provided a $10 billion loan guarantee to TMC.

A spokeswoman for Finance Canada told reporters in June that loan guarantees were “common practice. Marie-France Faucher said the federal government “does not intend to be the long-term owner of the project and will launch a divestment process in due course.” She said the project “remains commercially viable.”