The contentious Trans Mountain pipeline project could be the “modern-day economic version of a smallpox blanket,” the Union of British Columbia Indian Chiefs warned last week, in an open letter to the several Indigenous consortia that are lining up for a possible financial stake in the project.
Parliamentary Budget Officer Yves Giroux has called the pipeline “clearly non-profitable”, and former Encana Corporation CEO Gwynn Morgan has warned that “in the commercial (real) world, no one’s going to finance a project running vastly over budget, with no firm remaining cost or start-up date,” notes the UBCIC’s three-member executive committee.
The letter details the cascade of financial challenges the pipeline faces—from the delays and budget overruns that have brought its estimated cost to C$21.4 billion, to the project’s limited ability to recover rising costs from the fossil companies that use the pipeline, to the more than a dozen insurance companies that have lost confidence in Trans Mountain and now refuse to underwrite it.
“The construction cost of TMX has increased dramatically due to delays, mismanagement, and cost overruns,” the UBCIC states. “These include major setbacks resulting from climate-related events such as the forest fires, floods, and landslides that hit B.C. in 2021. The unfortunate reality is that we can expect more severe and frequent events that could further delay and disrupt the TMX’s construction and operation.”
As well, “opposition remains fierce among many of the First Nations whose territories are crossed by TMX, due to concerns about a spill on salmon and other wildlife as well as concerns about the climate crisis that hit B.C. hard in 2021,” the letter adds. “In short, TMX does not have the necessary Free, Prior and Informed Consent to proceed,” and “we would remind you that it would only take opposition from a single Nation to cause significant delays and further cost overruns.”
The pipeline’s prospective buyers still think it can operate at a profit, the Globe and Mail reports.
“For Ottawa, striking a deal to sell part or all of the contentious pipeline to Indigenous owners could help temper opposition to a project that opponents decry as expensive, outdated, and out of line with the government’s public commitments to achieve net-zero emissions and to reconciliation with Indigenous peoples,” the Globe writes.
“For First Nations mulling an ownership stake, the appeal lies in potential long-term cash flows and the prospect of greater control over projects that cross their traditional territories, through measures that include environmental monitoring and remediation,” the news story adds. “But the price, structure, and financing details of a potential deal remain open questions.”
CBC says the federally-owned Trans Mountain Corporation is blaming the latest cost overrun on a host of factors. The list includes borrowing costs, pandemic expenses, “productivity challenges” with subcontractors, natural disasters that changed the terrain along the pipeline route, the duty to protect culturally sensitive sites, and the need to manually remove rare moss, 100 anthills, and 15,000 frogs and other wildlife from the construction site.
In the last couple of weeks, meanwhile, a property owner has filed a compensation claim against Trans Mountain for financial losses caused by construction delays and “stigma of proximity to new pipeline,” and the company has reported one derailment and one brake failure at its tunnel boring and waste removal operation beneath Burnaby Mountain. Trans Mountain Corporation parried a query from Burnaby Now with a general statement declaring safety its “top priority”, but didn’t respond to a dozen question that reporter Cornelia Naylor later attached to the end of her news story.