The federal Crown corporation building the controversial Trans Mountain pipeline expansion in British Columbia has announced plans to begin filling the line in March or May, even as it warns that a pending regulatory decision could delay the construction project by up to 30 months.
In a January 3 regulatory filing, Trans Mountain Corporation said it set its target date for line fill “depending on the diameter of pipe it uses and assuming no new problems,” Reuters reports.
“Trans Mountain said the new schedules assume that it faces no delays caused by challenges drilling into hard rock, such as tool damage,” the news agency adds. But just before the December holiday, the Canada Energy Regulator (CER) cited safety concerns as its reason for refusing Trans Mountain’s request for a pipeline variance.
In a written statement released December 20, the regulator explained its earlier denial of the Crown corporation’s request for permission to use a different diameter, wall thickness, and coating for a 2.3-kilometre stretch of the pipeline, The Canadian Press wrote at the time.
The company said at the time it had run into challenges drilling through hard rock in the area, and warned of a possible 60-day delay in the completion of the project if it wasn’t granted a variance. TMX subsequently extended that estimate to a “catastrophic” two-year delay.
But the regulator said it had serious concerns with the quality of materials Trans Mountain had procured to construct the variance, adding it didn’t believe the company had demonstrated it could guarantee an appropriate level of safety and pipeline integrity if it went ahead with the change.
“Having pipe or components with mechanical properties not meeting specifications could lead to failure of the pipe or components under pressure testing or operating conditions, which could impact people and the environment,” the CER’s written statement said.
The development was just the latest in a series of hurdles Trans Mountain Corp. has faced as it races against the clock to finish its massive pipeline construction project.
The project’s completion, which had been expected in early 2024, is eagerly awaited by the country’s oil sands industry, which will benefit from improved access to export markets.
The pipeline expansion is also expected to reduce the Western Canada Select differential, the discount Canadian oil companies typically have to apply to their product—partly because of its consistent low quality compared to competing blends, but partly due to limited export capacity.
But the pipeline project has run into construction difficulties in its home stretch. Trans Mountain has already had to alter the route slightly near Kamloops due to difficulty drilling a tunnel.
Last month, Trans Mountain asked the regulator to reconsider its denial of the variance request, saying its construction challenges in B.C. are more significant than first indicated.
It said it now had reason to believe that proceeding with its current construction plan through complex hard rock conditions could compromise a borehole and result in the failure of drilling equipment.
That’s what could trigger the “catastrophic”, two-year delay for the project, the company said, at a cost of C$200 million in lost revenues for each month of delay.
Trans Mountain asked the regulator to make a decision before January 9 to prevent what it termed unnecessary delays, but a fragmentary news report January 4 said the CER is under no obligation to meet that timeline.
Since the federal government bought taxpayers a pipeline in 2018 following an extraordinary ultimatum from its original owner, Texas-based pipeliner Kinder Morgan, the project’s estimated capital cost has spiralled from $7.4 billion to $30.9 billion. In a mid-December regulatory filing, Trans Mountain called the more than four-fold increase “reasonably and justifiably incurred,” CP wrote at the time.
On December 23, the federal government announced another $1.75- to $2-billion loan guarantee for the beleaguered project.
The main body of this report was first published by The Canadian Press on December 20, 2023.
