Skip to main content

The Globe and Mail

Price tag for Trans Mountain expansion rises to $7.4-billion

Kinder Morgan Trans Mountain Expansion Project's Westeridge loading dock, at centre with green tanks, is seen in Burnaby, B.C., on Friday, Nov. 25, 2016.

JONATHAN HAYWARD/THE CANADIAN PRESS

The price tag for Kinder Morgan Inc.'s Trans Mountain expansion has increased again, this time to $7.4-billion – but the company says it still has strong commercial support for the long-awaited project.

The pipeline project cost had been pegged at $6.8-billion up until Thursday morning. Kinder Morgan now says the price tag has increased due to the 157 project conditions imposed by the National Energy Board, along with other changes – including thicker pipe wall, additional drilled crossings in environmentally sensitive areas and the plan to tunnel through Burnaby Mountain.

"It's been a lengthy and rigorous process, and in spite of the many changes in the markets over the five years since our customers signed on, we knew commercial support for this project remained strong," said Ian Anderson, president of Kinder Morgan Canada in a news release.

Story continues below advertisement

"Over the past five years, we've listened to Canadians and made changes to the project that have increased costs, but made our project better."

In 2012, 13 oil shippers made 15- and 20-year commitments totalling 708,000 barrels per day, or roughly 80 per cent of the capacity of the expanded pipeline. Following federal approval of the project last November, Kinder Morgan said it presented a final cost estimate and revised tolls to its customers.

Shippers had the option to keep their volume commitments or turn them back and pay their share of development costs incurred to date. In total, shippers – primarily oil producers – opted to turn back 22,000 barrels per day, or 3 per cent of the previously committed barrels, Kinder Morgan said Thursday. Those barrels will be made available in an open season, or period to determine market interest, that will begin Thursday.

The rest of the project's capacity, about 20 per cent, is reserved for spot volumes.

Kinder Morgan's plan is to nearly triple the capacity of the existing Trans Mountain pipeline system, which runs between Edmonton and Burnaby, B.C., to 890,000 barrels per day. The project still needs "acceptable financing" and a final investment decision. Construction is set to begin this fall, according to the company, with an in-service date slated for late 2019.

The project still faces fierce opposition from some Lower Mainland residents, environmental groups and First Nations. But for the oil industry, the project is a key conduit to international markets that will help break Canada's near-total dependence on crude sales to the United States.

Four years ago, the company expected a project cost of $5.4-billion. In the fall of 2015, Mr. Anderson said the price tag would be closer to $6.8-billion due to foreign-exchange swings, and changes and delays to the project.

Story continues below advertisement

Report an error Licensing Options
About the Author
Alberta reporter

  More

Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.