Energy East price tag rising
It’s looking like the Energy East project is going to get more expensive.
Trans-Canada Corp. (TSX:TRP), the company planning to build the controversial cross-Canada oil pipeline, had been estimating it would cost $12 billion.
But on Friday, it warned that figure is expected to grow.
On a quarterly conference call, CEO Russ Girling said the likely increase is due to adjusting the pipeline’s route following feedback from communities, governments and indigenous peoples as well as higher construction costs.
Trans-Canada did not provide an updated cost estimate or give any clarity on how much the price tag will rise.
Energy East was already going to be one of the costliest infrastructure projects in Canadian history.
For two thirds of the way, Trans-Canada aims to convert an underused natural gas pipeline and then build all new pipe through Quebec and New Brunswick.
According to Trans-Canada’s quarterly report, the company has already spent $700 million on Energy East — and regulatory hearings have not even started.
Alex Pourbaix, the company’s president of development, said considerable work and resources went into the hefty regulatory application filed last October. Ditto consultations with communities along the pipeline’s proposed 4,600-kilometre route through six provinces.
Trans-Canada also had to do a significant amount of in- tegrity work on the existing pipe to assure regulators it can be safely converted to ship oil, he added.
“This project has very, very significant scale and scope and where the regulatory process has gone, in order to make a regulatory filing, a very significant amount of field work, environmental studies, technical studies, engineering reports need to be prepared along with preliminary engineering. All of this is required just to inform the application,’’ said Pourbaix.
“On top of that, there is a real significant obligation — and something that Trans-Canada would do in any event — to work with stakeholders in the regions.’’
That includes open houses, one-on-ones with thousands of people and meetings with affected First Nations.
“As you can imagine, all of that work has costs associated with it,’’ said Pourbaix.
The goal of Energy East is to feed Alberta crude to eastern refineries as well as to export it across the Atlantic to lucrative new markets like Europe and India.
Trans-Canada had initially planned to build two export terminals — one in Cacouna, Que., and one in Saint John, N.B. However, Trans-Canada scrapped the Cacouna plans in April due to concerns over beluga whale habitat. Trans-Canada is evaluating whether to find another location in Quebec, or just have one in Saint John.