Oilpatch still feeling TMX angst Geoffrey Morgan
Fears persist over more possible delays despite plan for early restart on pipeline
Construction will restart on the Trans Mountain pipeline expansion earlier than many in the energy sector expected, but the federal government has yet to fully convince Calgary’s business community that it will resist pressure from opposition groups.
Energy investors and executives have been anxiously waiting to learn when construction will restart on the newly reapproved project, widely called TMX.
On Wednesday they learned construction on the heavy oil pipeline could be underway this September, earlier than expected, but that it will cost more than previous estimates of $7.4 billion.
“We’re confident now that our project will meet every standard, every regulation and every test and reflect the values and priorities and principles that we all care for as Canadians,” Trans Mountain Corp. chief executive Ian Anderson said during a conference call. “I could see shovels in the ground as early as September.”
Work on the pipeline stalled last August when the Federal Court of Appeal overturned the project’s approval on the grounds that Indigenous groups had not been properly consulted and its impact on marine wildlife had not been considered.
Anderson said the project’s costs would rise as a result, but he declined to provide an updated cost estimate for the pipeline that will twin an existing line between Alberta and British Columbia to boost oil shipments westward by 590,000 barrels per day by 2022.
“We all know time is money. We all know delays are going to push up costs,” he said.
Anderson said there still could be additional delays as environmental organizations have said they will seek to block the project through protests and legal challenges.
Anderson said the Crown corporation has security plans in place to mitigate potential delays caused by civil disobedience and has a standing court injunction in place preventing disruptions at its sites.
Still, the pipeline is expected to face stiff opposition from environmental groups and some Indigenous groups on the West Coast, as well as the B.C. government.
But Federal Finance Minister Bill Morneau said, “We will persist in this, absolutely,” when pressed for a direct answer on whether the federal government was committed to
We’re confident now that our project will meet every standard, every regulation and every test.
the project despite entrenched opposition. “I want people in Alberta and across the country to know that our intent is real.”
He added that the project now has 48 benefits agreements with First Nations groups compared to 43 a year ago. However, he declined to say what steps the feds would take to ensure the project was completed and whether they would use the army to enforce injunctions.
Morneau is the minister who oversees Trans Mountain Corp., having negotiated its purchase from Houston-based Kinder Morgan Inc. last year for $4.5 billion.
Kinder Morgan sold the project because of entrenched opposition from the B.C. government.
Morneau said the federal government is committed to de-risking the project before eventually selling the existing Trans Mountain pipeline and expansion project back to the private sector or First Nations groups.
Morneau was in Calgary on Wednesday to give a speech to the city’s business community, but missed an opportunity to soothe the oilpatch’s fears over potential delays to the pipeline, said Mount Royal University political science professor Duane Bratt, who attended the event.
“This wasn’t a TMX speech, this was an election speech,” he said. “That’s why he went through, ‘This is the record of our government.”
But the news of a quick construction restart — prior to the federal election in October — is an unexpected positive for the Canadian energy sector, says New York-based Eight Capital analyst Phil Skolnick. “For now, the impact on stocks is probably only going to be slightly positive at best, in our view, because sentiment is just too skeptical when it comes to Canadian pipeline news,” Skolnick said in a research note.