Indigenous groups want to buy Trans Mountain pipeline, despite escalating costs

 

Last updated 3/28/2022 at 10:47am

istockPhoto/Oksana Aksenova

EDMONTON, Alb.—Even though prices are skyrocketing on the construction of the Trans Mountain pipeline expansion project, Indigenous groups are still lining up, hoping to purchase the pipeline.

The 1,150-km Trans Mountain pipeline carries 300,000 barrels of oil per day, and is Canada's only pipeline system transporting oil from Alberta to the West Coast. The expansion will raise daily output to around 890,000 barels, which will expand Canada's crude oil production and expand the country's access to global energy markets.

In 2018, the federal government purchased the pipeline after the owners threatened to cancel the extension project, citing environmentalist opposition as the reason. The government has already announced that they do not wish to be the permanent owners of Trans Mountain.

Last month, the federal corporation that owns the pipeline revealed that estimated construction costs of the expansion have ballooned by 70 percent to $21.4 billion, up from an earlier estimate of $12.6 billion. Trans Mountain Corp. also pushed back the project's completion date from this year to the late in 2023.

Trans Mountain Corp. spokeswoman Siobhan Vinish confirmed to CBC news that due to existing contractual agreements with shippers, only 20 to 25 per cent of the increased capital costs can be passed on to oil companies in the form of increased rates oil companies pay to ship product on a pipeline.

This is how the pipeline company makes money, so that means Trans Mountain must absorb about $7 billion in cost overruns, ultimately eroding the project's returns. If the pipeline is sold upon completion some experts estimate that the loss to taxpayers could be billions of dollars.

Trans Mountain Corp. has said the extra cost projections are piling up as a result of the COVID-19 pandemic, November 2021 flooding in British Columbia, increased security costs, route changes to avoid culturally and environmentally sensitive areas, and scheduling issues from permitting processes and construction challenges.

Indigenous-led groups remain committed to pursuing ownership of the Trans Mountain pipeline, even as cost overruns for the pipeline expansion project soar.

Despite the escalating costs Indigenous-led initiatives like Nesika Services, a non-profit organization that is working to help Indigenous communities along the pipeline's route still want to acquire stakes in Trans Mountain.

"We still believe that Canada can sell a portion of this pipeline to Indigenous communities on a commercial basis," Paul Poscente, executive director of Nesika Service told CBC news. "We have been urging Canada to start a negotiation."

Project Reconciliation is another Indigenous initiative that has notified the government that they are still eager to purchase the pipeline, even though the current $21.4 billion estimate is 20 percent more than the group had anticipated spending. Chinook Pathyways is another Indigenous organization hoping to purchase equity.

The government has said it is amenable to Indigenous ownership of the pipeline. Deputy Prime Minister Chrystia Freeland has said that the government's Trans Mountain Corp. will need to secure third-party funding to complete the project. She also noted that despite the escalating costs, said the federal government still believes the Trans Mountain expansion is in the national interest to be completed.

And First Nations groups agree.

 
 

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