Don’t ask Trans Mountain’s owner-operator for a cost estimate or timeline

Trans Mountain workers on the pipeline Anchor Loop Project in Alberta. Photo courtesy of Kinder Morgan Canada

And it has admitted that recently secured financing is only enough to cover the next few months.

Canada Development Investment Corporation (CDEV), the Crown corporation that owns and operates the pipeline and is overseeing the expansion project, revealed these details during its annual public meeting on Dec. 11, as well as in a recent financial report.

The details make clear that, despite being owned by the government of Canada and promoted by Prime Minister Justin Trudeau as being in the national interest, CDEV and its corporate entities still harbour a significant degree of uncertainty about the project’s timeline and long-term financing.

For years, the expansion project has faced questions over when it will be completed, how much it will ultimately cost and how much of that expense can be passed on to shippers via tolls.

“We’ll need more clarity on the project’s schedule before we can determine the costs,” CDEV chairman Steve Swaffield said at the annual meeting held at the Shaw Centre in Ottawa.

“A revised toll will be made public closer to the in-service date.”

Meanwhile, in a recent financial report, CDEV admitted that “financial commitments have not been obtained to finance the entire project.”

The corporation negotiated a revised credit agreement with a federal fund called the Canada Account on July 30. The loan, or “credit facility,” has a limit of $2.6 billion through the end of 2019 that will increase to $4 billion in 2020 and will mature August 2023.

But this money “should be suitable to fund construction costs for (the Trans Mountain pipeline expansion) through the first half of 2020,” the report says, after which CDEV expects to negotiate again.

“It is imperative that continued and increasing financing sources are obtained in a timely manner,” the corporation wrote. The uncertainty, it said, is leading to “continued financial and completion risk for the project.”

Noreen Flaherty, corporate secretary at CDEV, confirmed to National Observer that the credit agreement was meant to fund pipeline expansion activities “in 2020.”

“CDEV does not expect that agreement to be of a sufficient size” to finance the construction of the entire expansion project, Flaherty said.

The former owner, Kinder Morgan, originally said the construction cost was $7.4 billion, but later filed documents showing it could cost between $8.4 billion and $9.3 billion. Economist Robyn Allan has estimated the current cost has reached $12 billion.

The construction completion date has been variously cited as between 2020 and 2023, depending on how legal and other issues play out.

At the annual meeting, CDEV said work at the Burnaby and Westridge terminals had started in August, pipe is on the ground in Alberta and expected to be “in the ground by Christmas” and the company was “looking forward to being underway with construction in every (section) by next fall.”

A ‘real thing’ or a ‘multibillion-dollar subsidy’?

The expansion project will roughly triple the capacity of the existing Trans Mountain pipeline, sending up to 890,000 barrels a day of crude oil and other petroleum products from the Edmonton area to a terminal in metro Vancouver.

Advocates including the federal government say the expansion project will create jobs and open Canadian fossil fuel products to new markets, generating new economic prosperity.

“We know that no matter how much people talk about information technology or cloud-based whatever, Canadian prosperity has and will continue to be driven by those who know how to build things,” Natural Resources Minister Seamus O’Regan said at a gathering of politicians in a field near Edmonton last week to celebrate construction commencing along the pipeline route.

“Real things, tangible things, things built by people, helping, in this instance, to move our resources from Alberta to new markets where they are needed.”

But critics say the expansion will put Canada’s carbon-pollution-reduction goals out of reach, and comes at the worst time, as the country struggles to deal with an advancing climate crisis.

The oil and gas sector is proportionally the largest polluter by sector countrywide, and Canada’s 173 billion barrels of reserves is the third-largest in the world.

The Federal Court of Appeal quashed the government’s original approval in the summer of 2018, saying it had failed in its legal duty to properly consult with First Nations and had carried out an insufficient environmental review.

The Liberal government approved the pipeline project for a second time last June, saying it had fixed both issues. But the court agreed in September that six of 12 fresh challenges could proceed, related to the Crown’s duty to consult and accommodate, and the Crown’s conflict of interest.

The Court of Appeal is now scheduled to hear fresh legal challenges this month from Coldwater Indian Band, Squamish Nation, Tsleil-Waututh Nation and others.

“The Trans Mountain pipeline is already a massive multibillion-dollar subsidy and Canadians have the right to know how much the price has increased,” said Eugene Kung, staff lawyer at West Coast Environmental Law, in a Dec. 10 statement.

“Canadians were told this would be a profit-generating investment and the profits would be devoted to renewable energy. Instead, it’s operating at a consistent loss and it isn’t even clear the government will be able to sell it, without taking another loss of billions of taxpayer dollars.”

‘The existing pipeline remains full’

At the annual meeting, Trans Mountain Corporation chairman William Downe said there had been “significant progress” on the expansion project, and argued the current pipeline’s full capacity demonstrated that there was a case to be made for the expansion.

“The existing pipeline remains full each and every month, with demand from customers exceeding the capacity consistently for the past decade. This demand for space is evidence of the strong and clear business case supporting Trans Mountain expansion,” he said.

“Shippers have made long-term contract commitments ranging from 15-20 years that will underpin the cost of construction and the operation of the pipeline. The additional capacity offered by the expansion will be used to supply more crude oil and refined products to markets in British Columbia and Washington state, and to offshore markets in the Asia-Pacific.”

President Ian Anderson said Trans Mountain has secured 15- and 20-year contracts with 13 shippers in Western Canada that cover 80 per cent of the capacity of the expansion project.

“So we’re fully expanded at 890,000 barrels a day, 80 per cent of that capacity is fully contracted for 20 years. The remaining 20 per cent is available to shippers to access on a month-to-month basis,” he said.

“Long-term financial security for the asset is very well-established with those long-term contracts, and the tolling mechanisms within them.”

The new loan was handled by Export Development Canada (EDC), another Crown corporation that provides support for Canadian exports. Canada Account transactions are administered by EDC, but taxpayers ultimately assume the risk; they are deemed by cabinet to be in Canada’s interest.

Andrew Stafl, vice president of finance at CDEV, confirmed the third-quarter statement from the corporation corresponds to the Canada Account loan agreement, and replaces an earlier one signed on Aug. 29, 2018.

Stafl also confirmed that another transaction, a loan guarantee that the pipeline had with Royal Bank of Canada and TD Bank, was no longer active. SOURCE

 

B.C. Premier talks pipeline, Western separatism at economic summit

Horgan wonders why Albertans feel animosity toward federal government that bought a pipeline


Vancouver Island Economic Summit audience members listen to a speech from B.C. Premier John Horgan on Oct. 23 at the Vancouver Island Conference Centre. (Nicholas Pescod/NEWS BULLETIN)

B.C. Premier John Horgan says he can’t understand some of the reasoning behind separatist sentiment in Western Canada after Prime Minister Justin Trudeau’s re-election.

“I understand the prime minister has said he is proceeding with Trans Mountain today,” Horgan said. “I have to scratch my head and say why is there such enormous animosity toward the federal Liberal government that bought the pipeline for the express purpose of getting it built?”

Horgan joined the Vancouver Island Economic Summit at the Vancouver Island Conference Centre in Nanaimo via video conference Oct. 23. The premier’s comments were in response to a series of questions about Western separatism, whether British Columbia can maintain good relations with its neighbours and how can he continue to justify “blocking the primary export product” of Alberta if he supports Canadian unity.

Horgan said he is keenly aware of the opinions of many Albertans, explaining that his relationship with Alberta’s former NDP premier deteriorated over the pipeline issue.

“I had one of my dear friends, Rachel Notley, become just an acquaintance over time over this issue,” he said. “So I know on a personal level how passionate the Albertans feel.”

The premier pointed out that B.C.’s electoral map following the federal election is a mixture of blue, orange, red and green and not a “sea” of blue and later said that it is important to move beyond a “partisanship” mentality and focus on issues that matter to people. He also said he’s satisfied with the results of the federal election.

“I’m encouraged that there is a new and diverse, dynamic House of Commons that will be working together, as we have been doing here in Victoria, trying to get past the partisanship, which is fundamental to our electoral process but is not always in the best interest of our governance,” Horgan said.

When it comes to Alberta, Horgan said he has a “working relationship” with Premier Jason Kenny.

“He has been focused federally and his sights have been set on Ottawa, but I’m sure the time will come when he will be looking back at British Columbia.”

Currently, the Horgan government is appealing a recent B.C. Court of Appeal decision which ruled he cannot implement laws restricting the amount of bitumen flowing into the province, taking the argument to the Supreme Court of Canada.

Horgan explained to the audience that his position on Trans Mountain is well-known and the province is “legally obliged” to follow the directive from the National Energy Board.

“As the Trans Mountain pipeline proceeds, I will be issuing permits as instructed, I will not be obstructing for the sake of obstructing but I want to make sure I protect those things that are important to at least half the people in this room, if polls are correct,” Horgan said. SOURCE

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Eric Denhoff: Why are Albertans so damned angry?

For environmentalists and Lower Mainland First Nations, 76 reasons to oppose Trans Mountain

One researcher says biggest risk to whales may not be oil tankers


A female southern resident killer whale breaches in the calm blue waters of the Salish Sea between Washington State and British Columbia, Canada. (Monika Wieland/Shutterstock)

There are no new protections for endangered southern resident killer whales in Tuesday’s latest approval of the Trans Mountain pipeline expansion project, say advocates, many of whom fear for the survival of the species.

“If the project goes forward as currently planned, it will further push the southern residents toward extinction,” said Margot Venton, a lawyer with environmental law firm Ecojustice.

“That’s what’s on the table.”

Last summer, the federal court of appeal struck down the proposed pipeline expansion project in part because the National Energy Board did not consider the impact that increased shipping from the project could have on the whales, which now number just 76 individuals in the wild, according to Orca Network.

The whales are protected by the federal Species At Risk Act, but their population has been in decline for years.

There are no new protections for endangered southern resident killer whales in Tuesday’s latest approval of the Trans Mountain pipeline expansion project, say advocates, many of whom fear for the survival of the species.

“If the project goes forward as currently planned, it will further push the southern residents toward extinction,” said Margot Venton, a lawyer with environmental law firm Ecojustice.

“That’s what’s on the table.”

Last summer, the federal court of appeal struck down the proposed pipeline expansion project in part because the National Energy Board did not consider the impact that increased shipping from the project could have on the whales, which now number just 76 individuals in the wild, according to Orca Network.

The whales are protected by the federal Species At Risk Act, but their population has been in decline for years.Those groups accuse the federal government of using half-measures to keep the species from disappearing forever.


Vessel noise can interfere with killer whales’ ability to hunt, navigate and communicate with each other, so researchers are looking into what impact it will have on them. (Elaine Thompson/AP)

Vessel noise has been found to interfere with their ability to hunt, and ship strikes can seriously injure or kill them. Environmentalists fear increased oil tanker traffic from an expanded Trans Mountain project could make these problems worse.

Canada’s fisheries minister says the federal government has acted to protect the whales, with a number of measures, including rules to reduce noise and traffic, but environmentalists and some First Nations are not convinced.

Those groups accuse the federal government of using half-measures to keep the species from disappearing forever. MORE

Trans Mountain approval met with promised resistance by First Nations

Trans Mountain
Justin Trudeau announced Tuesday the government has fulfilled its duty to consult Indigenous peoples and will move ahead with the Trans Mountain pipeline despite opposition from several First Nations who say they do not consent to the project.

The Trudeau government has approved the Trans Mountain pipeline expansion and is promising to have shovels in the ground this summer.

But First Nations are responding swiftly with commitments to resist the pipeline in order to protect the land, Indigenous rights, and to address the climate emergency.

The long-awaited decision was announced Tuesday in Ottawa, following months of renewed consultations with Indigenous communities as ordered by the Federal Court of Appeal last August.

Prime Minister Justin Trudeau justified the government’s decision on the basis it “has the potential to create thousands of solid middle class jobs for Canadians,” and that expanding the existing Trans Mountain pipeline’s oil sands output remains within the government’s carbon emission targets under the Paris agreement.

On Monday parliament passed a non-binding motion from Environment and Climate Change Minister Catherine McKenna declaring a climate emergency in Canada.

Trudeau announced Tuesday the government will work with Indigenous stakeholders who have expressed interest in purchasing the pipeline in part or in whole.

He said up to 100 per cent of the pipeline could end up in Indigenous investors’ hands.

But the government’s consultations with First Nations, and its interpretation of free, prior and informed consent — a principle it has vowed to respect to through its commitment to the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) — fall far short of Indigenous peoples expectations.’

Speaking at a press conference in Vancouver Tuesday, Tsleil-Waututh Nation (TWN) Chief Leah George-Wilson responded to the government’s decision to approve the pipeline with a promise of renewed litigation in the Federal Court of Appeal.

“We believe that the consultation, once again, missed the mark set by the Supreme Court of Canada — and we will defend our rights,” she said.

“TWN continues to withhold our free, prior and informed consent and are prepared to use all legal tools to ensure our governance rights are respected.”

First Nation leaders in B.C. also predicted a swell of grassroots resistance if the government attempts to begin construction in territories where consent has not been granted. MORE

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Angry protesters in Vancouver slam approval of “devastating” Trans Mountain pipeline expansion
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Trans Mountain pipeline: will it happen?
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Vaughn Palmer: Down to the last tool in the tool box, the legal bills keep climbing for Horgan in pipeline fight

Eight Hard Questions for the PM of Pipelines and Climate Emergency

He says Canadians can have it both ways. The facts say otherwise.

COVER.Trudeau-Two.jpg
What Trudeau’s Liberals have done cannot be reconciled. Photo via Justin Trudeau Flickr.

As the planet slowly stews in its increasingly sultry juices, sled dogs are walking on water, but Justin Trudeau no longer is.

Polar bears are starving, the Arctic permafrost is melting, and glaciers are retreating faster than the PM on electoral reform and government transparency. And oh yes, as of yesterday, Canada is expanding the Trans Mountain Pipeline. That is called renovating the outhouse when indoor plumbing is the answer.

I picture Sheriff Jason Kenney’s posse, spurs ajingle and six guns flapping on their chaps, saddling up and galloping off to their war room at my imagery.

They do that now when they hear any “radical environmentalist” rearing his pesky head as opposed to those petrol Pollyannas of the energy sector who, as everyone knows, are full of philanthropy, mercenary science, and boffo marketing. The guys who make profits and tailings ponds.

But even those with their heads buried in bitumen have to resolve the latest development in what’s left of their social conscience. The Liberals and the rest of parliament have declared that Canada is experiencing a climate emergency. (There was one notable dissenter — those permanent campers in Jurassic Park on all matters touching the environment, the Conservative Party of Canada. Emergency, what emergency?)

Yet on the same day the “emergency” is declared by everybody but the fossil heads, the government says yes to the Trans Mountain Pipeline expansion. As Shakespeare observed in Macbeth “Such welcome and unwelcome things at once. ’Tis hard to reconcile.”

Eight questions for Justin Trudeau

So a few blunt questions for the PM, who continues to publicly peddle the dubious line that Canadians can have it both ways, while privately linking arms with the CEOs.

1. Since Canada is already on track to miss its emission targets set in Paris by 79 megatonnes (only Gambia and Morocco are on target), how do you justify greenlighting a project that will add 20 per cent to carbon emissions from the Alberta tar sands?

2. You once said that only communities could issue the social license for mega projects like this. So what do you say to the Squamish Nation, and the cities of Vancouver and Burnaby who have not granted that social license?

3. If expanding Trans Mountain is such an economic winner, why did Kinder Morgan happily unload this project on the Canadian people? Where were the rugged captains of private industry when this “jewel” went up for sale? MORE

House of Commons declares a climate emergency ahead of pipeline decision

Liberal, NDP, Bloc Quebecois and Green MPs all voted in favour of the motion


Minister of Environment and Climate Change Catherine McKenna arrives at a cabinet meeting on Parliament Hill in Ottawa on Tuesday, June 18, 2019. (Sean Kilpatrick/Canadian Press)

The House of Commons has passed a non-binding motion to declare a national climate emergency in Canada, kicking off a week that will test the Liberals’ promise to balance environmental protection with economic development.

The motion, put forward by Environment and Climate Change Minister Catherine McKenna, calls on the House to recognize that “climate change is a real and urgent crisis, driven by human activity” and to “declare that Canada is in a national climate emergency which requires, as a response, that Canada commit to meeting its national emissions target under the Paris Agreement and to making deeper reductions in line with the Agreement’s objective of holding global warming below two degrees Celsius and pursuing efforts to keep global warming below 1.5 degrees Celsius.”

It passed Monday night with 186 votes to 63. According to the House of Commons Procedure and Practice guide, a resolution of the House “is a declaration of opinion or purpose; it does not require that any action be taken, nor is it binding.”

Liberal, NDP, Bloc Quebecois and Green MPs all voted in favour of the motion, pitting themselves against the Conservatives and People’s Party of Canada Leader Maxime Bernier.

“If it is such an emergency, why is the prime minister jetting back and forth today from the Raptors parade, creating a big carbon footprint?” asked Conservative MP Michelle Rempel during debate.

Despite voting in favour of the motion, NDP MP Peter Julian rose in the House to call it “meaningless.”

“The Liberals are slapping each other on the back because they passed a motion that is meaningless. [On Tuesday] they are going to rubber-stamp the Trans Mountain pipeline, which will dramatically increase greenhouse gas production in the country. The hypocrisy is beyond belief,” he said. MORE