After a decade of touting the Trans Mountain pipeline as the solution to their economic woes, Canadian oil producers are expressing “growing disappointment with the highly-anticipated project” as they look ahead to rising costs to ship their product, Bloomberg News reported last week.
Five of the country’s biggest oil sands operators—BP, Canadian Natural Resources Inc. (CNRL), Cenovus Energy, PetroChina, and Suncor Energy—“have filed letters with the Canada Energy Regulator voicing concerns about how much of the project’s cost overruns they’ll have to pay for as well as how the pipeline plans to handle fees for late shipments,” Bloomberg writes. Taxpayer-owned Trans Mountain Corporation was expected to reply by the end of last week.
The long-running effort to triple the size of the existing Trans Mountain line “was supposed to provide a fast and relatively cheap way to sell Canadian crude into Asian markets through shipping terminals near Vancouver, breaking producers’ dependence on U.S. refiners,” Bloomberg recalls. “But environmental opposition and construction challenges have delayed the line and boosted its costs. The resulting higher tolls may make Trans Mountain a more expensive way to reach Asian buyers than shipping through the U.S. Gulf Coast.”
Yesterday, Reuters confirmed that TMX will probably route Canadian oil to the U.S., “as Asia gobbles up Russian oil that is cheaper due to sanctions from Western countries after Moscow’s invasion of Ukraine.” While “Asia’s heavy crude refining market is roughly nine times the size of California’s,” the news agency adds, “the geopolitical upheaval means Canada will struggle to reduce its reliance on its No. 1 oil customer,” the United States.
“A lot of our lunch has been eaten by the Russians and Middle Eastern countries like Iraq,” one Canadian oil trader told Reuters.
Bloomberg notes that the cost of completing the pipeline has increased more than five-fold since it was first proposed, becoming what Dogwood BC called a “catastrophic boondoggle” when the latest, C$30.9-billion price tag was announced in March. That’s alongside a litany of other problems along the line.
As those costs continue to skyrocket, the oil sands producers who’ve signed on to use the pipeline are only on the hook for 20 to 30% of the cost increase, Bloomberg notes. But “these so-called uncapped costs have climbed to C$9.09 billion from $1.77 billion in 2017.”
That had CNRL complaining to the Canada Energy Regulator that “the level of proposed increase in the tolls will negatively impact netbacks obtained by Canadian producers and may adversely and materially impact the overall competitiveness of Canada’s oil industry and the public interest.”
In other pipeline news, the Canadian Centre for Policy Alternatives is urging the federal government to support the United States against a US$15-billion lawsuit from Calgary-based pipeliner TC Energy over President Joe Biden’s decision, on his first day in office, to cancel the Keystone XL pipeline, The Canadian Press reports.
“Though the TC Energy dispute pits a Canadian company against the U.S. state, it does not follow that it is in Canada’s interest for TC Energy to prevail,” the CCPA report says. The other option is “for both governments to defend their ability to pursue climate-friendly public policy without being forced to ‘unjustly’ enrich impacted investors,” CP writes, citing the report.
“The Keystone XL case is a clear example of a company wanting to be compensated for making a risky bet,” wrote co-authors Stuart Trew and Kyla Tienhaara.” And clearly, “this bet didn’t play out.”
Todd Scorah 
Louis Grant 
Mitchell Beer 
Bas 
Neilbcca 
Rick 
Morey Smith 
Ian St. John 
Donagaud 
Ishtar 
Any company that bets on the Canadian and US governments to make a decision based on science over politics and a misguided political agenda is foolhardy.
How long do you think investors are going to keep on investing without any meaningful return on the investment.
Well they do have the option of, y’know, stopping. There’s a whole, massive, global clean energy transition for them to buy into, with the side benefit that their product won’t bake us all when used as directed.
Yes they can invest in sweaters and warm blankets too!
Sure, why not. As long as they’re made of wool, not polyester, a fossil fuel product that is dangerously hard to extinguish if it catches fire. 🙂 (About 15 years ago, our daughter turned that initial insight into a Canada-Wide Science Fair project.)
But I don’t understand. Surely you aren’t suggesting that people should be freezing in the dark, when deep energy retrofits can put an end to the days when anyone has to choose between food and fuel? That would just be vindictive and wrong, and you wouldn’t want to make vindictiveness the cornerstone for your argument in favour of fossil fuels, would you?
And I have to assume you would never want to compel households or utilities to pay more for natural gas when solar+ and wind+storage are already cheaper, with prices on track to fall another 40% in the next decade or so? That kind of command and control would certainly cast a shadow over the swashbuckling independence the fossil industry tries to portray, anytime it isn’t hitting up taxpayers for another multi-billion-dollar subsidy.
But, sure, no objection to blankets of the properly-constructed variety, as long as you aren’t trying to use them to obscure the actual issues.
They all want free enterprise, but scream for subsidies! Let the cheapest form of energy get the subsidy. Screw oil like they’ve done to us and the environment !!
As soon as the Federal (or provincial) government gets involved in anything, the pigs are at the trough waiting to gobble up taxpayer dollars without producing expected results. A $30 Billion pipeline ? Private companies could likely put one through the Pacific right to China for that cost.
Wait to see the cost overruns on the new nuclear station in Ontario. Darlington was supposed to be around $2 Billion and clocked in around $14 Billion after all a said and done. I could go on……
Wholly Smokes… !!
The TMX was doomed to disappoint from before the Canada vs Alberta poltiical posturing forced in on the taxpayer. Tar Sands crude is not competitive with middle eastern oil. The port cannot even handle AfraMax (the smallest oil tanker) because of shallow bottom (they can fill about 80% full) which makes shipping uncompetitive to global destinations and China doesn’t have that much heavy/sour oil refinery capacity.
They did buy eight loads back when the storage crunch causes a crash in price to $13/Bbl but the TM pipeline can deliver to Port Vancouver (so it gets to tidewater despite the endless political slogans) but China won’t buy it at $50/Bbl. The ONLY markets were always the West Coast of the USA and BC. Not competitive to send it to the Gulf even while we have spare pipeline capacity.
Political stupidity backed by a gullible public. The other hope today is that BC can build more heavy oil refinery capacity and use the pipeline to insulate itself from volatile US imports. With the Alaska pipeline imports they depend on getting low, it would be a wise move, but building a multi-billion dollar refinery capacity would not be a picnic either.
Canada should have built a clean refinery in Alberta years ago !
Why do climate alarmist rarely include the third world in their concerns?
E.G. Africa forever in energy poverty with their non world vision.
The sun and wind are intermittent,unreliable fuels that always need backup from a reliable source of energy
usually fossil fuels; and, fossil fuels are the key to improving the quality of life for billions of people in the developing world. Calls to “get off fossil fuels” are calls to degrade the lives of innocent people who merely want the
same opportunities we enjoy in the West . That’s YOU
There are no societies ever that have or will climb out of poverty with renewables alone. There is a moral case for fossil fuels.
No climate “alarmists” around here. We’re just a bunch of boring pragmatists who follow the evidence where it leads. Which means listening to and standing alongside developing countries on the front lines of the climate emergency, even though they’ve done the least to contribute to it through their proportionately tiny greenhouse gas emissions, and committing to solutions that will help them develop better, more equitable economies by getting out from under fossil fuel dependence.