Canada’s federal government in Ottawa says it is cutting off funding for the Trans Mountain pipeline expansion project as its cost has nearly doubled and the timeline for completing the taxpayer-owned project has been extended to next year.
In a news release, Trans Mountain Corp. said the estimated total cost of building the expansion has swelled to $21.4 billion from a previous estimate of $12.6 billion. Completion of the project is now expected in the third quarter of 2023. It had been expected to be finished this year.
Federal Finance Minister Chrystia Freeland said in a separate news release that the government is not going to put any additional public money toward the project. Ottawa also reiterated that it plans to divest Trans Mountain and that it’s looking for economic participation with Indigenous groups.
Trans Mountain noted in its release that the pandemic and last November’s flooding in B.C. have complicated the construction process and accounted for $1.4 billion in additional costs.
The most significant contributor to the project’s ballooning price tag is $2.6 billion attributed to “schedule pressures,” which Trans Mountain said includes permitting as well as challenging marine and terrain conditions.
Canada’s federal government stepped in to buy Trans Mountain in mid-2018 after the project’s original proponent, Kinder Morgan (KMI), threw in the towel amid frustration over the regulatory process.
Committed Trans Mountain expansion shippers Cenovus Energy (CVE) and Suncor Energy (SU) said on Friday that they continue to stand by the project.
The expansion is a twinning of the existing Trans Mountain pipeline, which runs from Strathcona County, Alberta to Burnaby, British Columbia and will nearly triple the system’s capacity to 890,000 barrels of oil per day.