Costs for the Trans Mountain expansion project continue to rise, but with the company behind it becoming more opaque since Ottawa bought the pipeline, it’s hard to say by how much, according to a new report of the West Coast Environmental Act (WCEL).
That’s why the Vancouver-based nonprofit is asking the next federal government to provide detailed and transparent information on the project’s cost and schedule, fearing the bill will exceed the announced $ 12.6 billion. in February 2020.
“We estimate that the cost of construction is now approaching $ 20 billion,” said Eugene Kung, a co-author of the study. “Part of the challenge is that without updated information from Trans Mountain, we have to make these assumptions, (but) until you see something credible that changes that, my opinion is that it is close to $ 20 billion.”
Kung explains that WCEL arrived at that figure by carefully studying hundreds of documents filed with Canada’s Energy Regulator, along with affidavits.
“What we found was evidence in each segment of the portfolio of delays ranging from two to 23 months, and what it allows us to do is project that the project will now be delayed until 2023,” Kung said.
Trans Mountain declined to comment on specific claims made in the report.
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“At this time, we do not have any updates to the overall project cost or schedule; any updates will be the result of a thorough and detailed process,” a spokesperson said.
The report highlights delays caused by “systemic noncompliance with COVID-19 protocols,” stop-of-work orders related to logging after federal officials caught subcontractors cutting down trees in an area where protected birds nest. and wildfires during the construction season.
There are also delays related to complex engineering challenges, such as Drilling a tunnel through Burnaby Mountain or drilling under the Fraser River. Construction of the tunnel began in May and is expected to take 20 months, assuming there are no delays. Drilling under the Fraser River would take 14-15 months and is scheduled to begin in October.
Complex mega-projects like TMX are susceptible to cost overruns in part because minor problems can turn into long delays, since there are so many moving parts that have to happen in a certain order. For example, the Crown corporation has to drill the tunnel through the mountain before the pipeline can be installed.
Coordination is only half the battle because there are also physical limitations in the construction season, such as animal migration and breeding patterns, weather, and increasingly wildfires.
“There has to be a point where these projects no longer make sense, and I think that’s especially true when we are talking about a piece of oil and gas infrastructure in a climate crisis,” says Eugene Kung, staff attorney at @ WCELaw . # Elxn44
“I was driving along the construction route this summer along the Coquihalla Highway, and the day before the July Mountain Wildfire struck Coquihalla, I was right in a major construction zone that was previously active but that she had to be evacuated, ”Kung said. “That really brought him home, and of course the irony of trying to force or rush the construction of an oil pipeline while the territory is burning was not lost on anyone.”
Kung said that one of the reasons that Trans Mountain has been able to “maintain the illusion of being in the program is by circumventing local laws” or by being excused from the conditions that were originally imposed.
“By our count, they have requested relief from the regulator 70 times, and we could only find one case where regulators said no to those requests,” Kung said.
One example noted in the report was last year when Trans Mountain re-drilled under the Thompson River without first seeking regulatory approval and requested exemption from that requirement.
The regulator did not buy into Trans Mountain’s raison d’être for apologizing instead of permission, saying “the commission takes violations of its requirements seriously.” Still, the regulator granted Trans Mountain’s request.
“This raises concerns that if there were a failed drilling attempt under the Fraser River, Trans Mountain could continue to ignore CER requirements to meet its commissioning date, and then apologize,” the WCEL report says.
The construction delays not only add millions to the total price, but also mean that Trans Mountain is losing the revenue it hoped to earn.
In a sworn declaration Since last year, Trans Mountain CEO Ian Anderson said that each month the company is late in commissioning the pipeline accounts for about $ 100 million in lost revenue. In that same document, it also says construction delays of “several months” would result in “hundreds of millions in excessive capital costs.”
Kung highlighted comments from federal Climate Minister and North Vancouver Liberal candidate Jonathan Wilkinson last month where told the CBC The proceeds from Trans Mountain would be used for climate action, as short-sighted.
“I hope that we are not pinning our energy transition hopes on the profitability of this pipeline because, from what I can see, that is very doubtful in terms of future profitability. And, in fact, it is more likely to be a stranded asset than a profitable company, ”he said.
“There has to be a point where these projects no longer make sense, and I think that’s especially true when we talk about a piece of oil and gas infrastructure in a climate crisis.”
A article published Wednesday in Nature examines what percentage of fossil fuels needs to stay in the ground to keep warming at 1.5 C, and found that global oil production must fall by roughly three percent annually through 2050 to stay within the threshold. The study concluded that, globally, 60 percent of fossil oil and methane gas, and 90 percent of coal, must remain intact.
“This implies that most regions must reach peak production now or within the next decade, rendering many planned and operational fossil fuel projects unviable,” reads the article by Dan Welsby, James Price, Steve Pye and Paul Ekins.
Cam Fenton of climate advocacy group 350 said that because Canada is a major oil producer, the reduction in production would have to be higher than the world average of three percent.
“The longer we wait to begin to phase out (and) stop expansion, and then do a controlled decline in production, the greater the annual percentage decline will be to meet these targets,” he said. “The greater the percentage of decline in production per year, the more economically damaging (it is) … to communities and workers.”
The study published in Nature estimates that 83 percent of proven reserves in the oil sands are untractable to stay within Canada’s portion of the 1.5 C carbon budget. Canada’s untractable resources are the highest of any region, well above of the world average of 58%.
The study “is directly related to Trans Mountain,” Fenton said. “It raises serious questions about why we are using public money to build this project.”
NDP leader Jagmeet Singh has said that despite being against TMX, he would not necessarily cancel it, saying that he first wants to have clear control of the project’s finances.
The Green Party platform says it would cancel all new pipes, starting with Trans Mountain.
The Liberal and Conservative parties did not return a request for comment.
John Woodside / Local Journalism Initiative / Canada National Observer
Reference-www.nationalobserver.com