Cost of Trans Mountain Pipeline project expansion skyrockets

The controversial Trans Mountain Pipeline project is generating more debate due to the potential increased cost to Canadian taxpayers.

The pipeline to transport oil from Alberta to the B.C. coast was purchased by the federal government in 2018 after Kinder Morgan threatened to scrap the expansion project in the face of environmental opposition.

The government bought the project for just under $5 billion but the cost of completing the pipeline has exploded over the past five years and is now estimated at more than $30 billion.

The former head of ICBC and economist Robyn Allan told Global News that the ballooning costs are being incurred by a government that preaches environmental responsibility.

“On the one hand we’re told that we’re going to tackle our dependency on fossil fuels, and then they overspend to buy a heavy oil pipeline, the worst among the fossil fuels in the world,” Allan said.

“They overspend to buy it, and then they mismanage to build it, so Canadian taxpayers are going to be on the hook for something like 25 to 30 billion dollars.”

Deputy Prime Minister and Minister of Finance Chrystia Freeland did not respond to Global News’ request for comment this week.

1:52 Trans Mountain pipeline construction costs balloon again

In a statement to Global News, the Canadian government’s Department of Finance said the government acquired the project as it was a serious and necessary investment.

“The federal government does not intend to be the long-term owner of the project, and we will launch a divestment process in due course. BMO Capital Markets and TD Securities have been engaged by the government to provide advice on certain financial aspects of the project. Their analysis confirms that third-party financing is a feasible option to fund the completion of the project and believe that both strategic and financial investors would participate in a divestment process to acquire the company once the project becomes operational.”

Allan said, having crunched the numbers, the pipeline project is likely to end up as the single biggest subsidy to the oil industry in Canada’s history.

“Every barrel of diluted bitumen that goes through that pipeline, to be burned into the atmosphere, Canadian taxpayers who are struggling with climate change are on the hook for around half the cost of shipment because Ottawa has not managed this project properly and ensured that the big oil companies that said they wanted this project so badly actually pay for it,” she added.

Allan believes if the oil companies were forced to pay for the project, the pipeline would never be built.

1:51 Trans Mountain pipeline to result in net loss for Ottawa: Parliamentary Budget Officer

The 1,150-km Trans Mountain pipeline is Canada’s only pipeline system transporting oil from Alberta to the West Coast.

Its expansion will increase the pipeline’s capacity from 300,000 barrels per day to a total of 890,000 barrels per day, supporting Canadian crude oil production growth and ensuring access to global energy markets.

— with files from Paul Johnson and Amanda Stephenson