🇨🇦 Canada’s Trans Mountain oil pipeline’s faces hearing on route change dispute
CALGARY, Alberta (Reuters) – Canadian regulators on Monday kicked off a two-day hearing to weigh up a controversial route change request from the Trans Mountain expansion (TMX) project that has sparked Indigenous opposition and may lead to further delays for the key oil pipeline.
After years of environmental opposition, regulatory hold-ups and ballooning costs, Canadian government-owned TMX is nearing completion and due to start shipping an extra 590,000 barrels per day of crude from Alberta to Canada’s Pacific coast in the first quarter of 2024.
Canadian producers are eagerly awaiting the increased export capacity that will open up access to markets in Asia and the U.S. West Coast and help support heavy oil prices.
But last month Tran Mountain Corp (TMC), the crown corporation building the expansion, asked the Canada Energy Regulator (CER) to change the approved route on a 1.3-kilometre (0.8 mile) section of pipeline near Kamloops, British Columbia, to avoid planned micro-tunneling construction that it now says is unfeasible.
TMC’s proposal to instead lay the pipeline through a different area nearby, using horizontal directional drilling and a conventional open trench, is being opposed by the Stk’emlupsemc te Secwepemc Nation (SSN) First Nation, whose territory the pipeline crosses.
Last week, TMC said being forced to continue with the micro-tunneling option could mean that segment of the pipeline is not completed until December 2024, versus a January completion date if the route adjustment is granted. Building the micro-tunnel could cost as much C$86 million ($63.64 million), the corporation added.
Earlier this year, TMC estimated the entire expansion project would cost C$30.9 billion, more than four times its original budget, and warned the price tag could rise further.
Concerns about TMX being delayed have already started weighing on Canadian crude prices, as traders worry rising oil sands production could get bottlenecked in Canada.
The dispute will also likely complicate the Canadian government’s plan to sell the pipeline once construction is finished. Trans Mountain was bought by Prime Minister Justin Trudeau’s Liberal government from Kinder Morgan Inc in 2018 to ensure it got built.
“It truly is a nightmare come true for the Canadian government,” said Morningstar analyst Stephen Ellis. “The response of the SSN First Nation seems quite compelling and detailed, and lays out Trans Mountain’s shortfalls in a very clear fashion.”
In letters already filed with regulators, the Indigenous group says altering the route would disturb lands that hold “profound spiritual and cultural significance”, and it only agreed to allow TMX to cross its territory in the first place because of assurances the micro-tunneling would work.
“Any support or consent that SSN has provided for the Project has been based on conditions that explicitly protect the PÃpsell (Jacko Lake) Corridor from disturbance or harm,” the SSN said in an August filing.
Ellis said it seemed likely the expansion project would be delayed even if regulators grant TMC’s request, echoing a letter filed last week by Canadian Natural Resources Ltd, a major shipper on the pipeline.
The CER will hear arguments and cross-examinations from both the SSN First Nation and TMC over two days in Calgary, and extend the hearing to a third day if required.
A CER spokeswoman said regulators will issue a decision as soon as possible after considering all the evidence, and recognized the time sensitivities associated with hearing.
($1 = 1.3548 Canadian dollars)
(Reporting by Nia Williams; Editing by Aurora Ellis)
