Trans Mountain crude pipeline expansion 80% complete, costs up 44%

Trans Mountain Corp. is 80% complete with its 590,000-b/d Trans Mountain crude oil pipeline expansion project (TMEP), with mechanical completion expected by end 2023. The company expects TMEP to enter service first-quarter 2024. Once TMEP is completed, the pipeline system will have a total capacity of 890,000 b/d.

TMEP consists of installing 992 km (615 miles) of 36-in. and 42-in. OD pipe, reactivating 193 km of pipe, and constructing 12 new pump stations, 19 new storage tanks at existing terminals in Burnaby and Sumas, BC, and Edmonton, Alta., and three new berths at Westridge marine terminal in Burnaby. The Alberta portion of the project is complete. All pump stations across both provinces are complete. Berth 1 at the Westridge marine terminal is scheduled to be commissioned May 2023.

Project capacity is 80% committed to 11 shippers, representing a mix of Canadian and international producers and refiners, under 15 and 20-year take-or-pay contracts. The remaining 20% of capacity will be available for spot shipments.

Trans Mountain expects total project cost to be C$30.9 billion ($22.35 billion), a 44% increase from last year’s estimate. The company, a part of the Canadian government, says it is in the process of securing external financing to fund the project’s remaining cost. Canada bought the pipeline from Kinder Morgan Inc. in 2018. Minister of Finance Chrystia Freeland has repeatedly said that the government well sell the pipeline once it’s complete.

Specific factors cited by Trans Mountain for the cost increases include “high global inflation and global supply chain problems; unprecedented floods in British Columbia; unexpected major archaeological discoveries; rough terrain between Merritt and Hope, BC; earthquake standards in the Burnaby Mountain tunnel; unexpected water disposal costs in the Sumas Prairie; and issues regarding densely populated areas between Sumas and Burnaby, BC.”

Ernst & Young LLP (EY) conducted an independent economic impact assessment for the project in March 2023. The assessment estimated that during construction between 2018-23, TMEP will contribute C$52.8 billion in gross output, C$26.3 billion in gross domestic product (GDP), including C$11 billion in wages and more than 67,423 full-time equivalent (FTE) jobs, and C$2.9 billion in tax revenue. After completion, EY expects that Trans Mountain’s expanded operations will contribute C$17.3 billion in gross output, C$9.2 billion in gross domestic product, including C$3.7 billion in wages and more than 36,066 FTE, and C$2.8 billion in tax revenue over the next 20 years.