Name of the Project
Trans Mountain pipeline expansion project.

Location
The pipeline will run between Strathcona County (near Edmonton), Alberta and Burnaby in British Columbia, Canada.

Client
Kinder Morgan Canada (KMC).

Project Description
The original Trans Mountain pipeline was built in 1953 and continues to operate. The project proposes a 980 km expansion of this 1 150 km pipeline. The expansion, if approved, will create a twin pipeline that will increase the nominal capacity of the system from 300 000 bbl/d to 890 000 bbl/d.

The existing line will carry refined products and synthetic and light crude oils, with capability to carry heavy crude oils.

About 73% of the proposed route will use the existing right of way; 16% will follow other linear infrastructure, such as TELUS, hydro or highways; and 11% will be new right-of-way infrastructure.

The project includes the reactivation of 193 km of pipeline; the construction of 12 new pumpstations; the addition of 20 new tanks to the existing storage terminals in Burnaby (14), Sumas (1) and Edmonton (5); and the expansion of the Westridge marine terminal by three berths.

Potential Job Creation
British Columbians will be first in line for jobs at the project, which entails more than 75 000 person-years of employment. It will also boost the province's gross domestic product by C$19.1-billion during construction and operations over 20 years, and generate more than $2.2-billion in tax revenue for provincial and local governments.

Value
The project is expected to cost about $7.4-billion.

Duration
The project is expected to begin construction this year and to be brought into service in 2020.

Latest Developments
KMC has placed nonessential activities and related spending at the Trans Mountain pipeline expansion on hold, as opposition to the project in British Columbia intensifies.

The project, which was previously given the green light to proceed by the federal government and the previous Liberal British Columbia government, encoubtered difficulties when the incoming minority British Columbia government took power nearly a year ago and vowed to use every tool available to thwart the company’s development plans.

KMC has said that it will not commit any further shareholder resources to the project, but will continue to consult with various stakeholders to reach agreement by May 31 to seek a way forward. The discussions will serve to gain clarity on the path forward, particularly regarding construction through British Columbia, and to ensure shareholder protection.

The pipeline is seen as critical infrastructure that would enable Canada, which holds the world's third-largest oil reserves, to reach new markets across the Pacific Ocean in the Far East. The existing pipeline has been operating to world-leading standards for about 50 years, and a tripling of capacity is required to wean Canada of its reliance on the US as its biggest crude customer, while the US ramps up output to become the world’s largest oil producer by 2023, according to the International Energy Agency.

The project has the support of the federal government and the provinces of Alberta and Saskatchewan but faces continued active opposition from the government of British Columbia.

KMC has taken a ‘primarily permitting’ approach to its activities during the first half of this year, focused on advancing the permitting process, rather than spending at full construction levels, until it obtains greater clarity on outstanding permits, approvals and judicial reviews. To date, Trans Mountain has spent about C$1.1-billion to develop the project.

However, rather than achieving greater clarity, the project is now facing “unquantifiable risk”, the company has stated.

According to KMC, opposition by British Columbia is manifesting itself mainly through the province’s participation in an ongoing judicial review. “Unfortunately, British Columbia has now been asserting broad jurisdiction and reiterating its intention to use that jurisdiction to stop the project. 

“British Columbia's intention in that regard has been neither validated nor quashed, and the province has continued to threaten unspecified additional actions to prevent project success. Those actions have created even greater, and growing, uncertainty with respect to the regulatory landscape facing the project,” KMC president and CEO Steve Kean has said.

The parties still await judicial decisions on challenges to the original Order in Council and the British Columbia Environmental Assessment office approving the project. These items, combined with the impending approach of critical construction windows, the lead-time required to ramp up spending, and the imperative that the company avoid incurring significant debt, while lacking the necessary clarity, have brought KMC to its decision point.

“The uncertainty created by British Columbia has not been resolved but instead has escalated into an intergovernmental dispute,” Kean has said.

KMC has said that if it cannot reach agreement by May 31, “it is difficult to conceive of any scenario in which we would proceed with the project”. 

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Kinder Morgan, tel + 1 855 908 9734 or email media@transmountain.com.
Trans Mountain, tel 1 866 514 6700 or email info@transmountain.com.