Vancouver Sun

Trans mountain spending drying up

- GORDON HOEKSTRA ghoekstra@postmedia.com twitter.com/gordon_hoekstra

Constructi­on spending on the Trans Mountain oil pipeline has been minimal since the Canadian government announced its $4.5-billion purchase of the expansion project and its existing assets from Kinder Morgan Canada.

In a conference call Wednesday to discuss financial results, Kinder Morgan Canada revealed it had spent about $1.25 billion on the $7.4-billion expansion project to May 31, the date that Canada started picking up the constructi­on tab after reaching a purchase agreement the day before.

But only another $41 million was spent in June, said Kinder Morgan. There were no figures for July.

The deal was reached after Kinder Morgan issued an ultimatum, saying it needed certainty that it could build the project through B.C. or it was walking away.

At the time, Kinder Morgan CEO Steve Kean said the company couldn’t put any more capital at risk without that certainty, particular­ly when they were at the stage that the next steps required a significan­t increase in constructi­on spending of $300 million to $400 million per month.

At issue, was opposition to the project by Premier John Horgan’s NDP government, which launched a reference case in April at the B.C. Court of Appeal, asking it to rule whether the province has the right to put restrictio­ns on heavy-oil transporta­tion. Concluding that case, which is likely to end up at the Supreme Court of Canada, could take years.

The sale agreement included resumption of constructi­on and Canada taking over financing of the expansion project while the sale was completed.

Energy industry consultant Ed- ward Kallio said he isn’t surprised that there hasn’t been a major ramp-up in constructi­on.

“I doubt they’ll make huge expenditur­es until that deal closes,” said Kallio, principal of Calgarybas­ed Eau Claire Energy Advisory Inc.

“The end result — is there is going to be a delay.”

The sale isn’t expected to close until late in the third quarter ending in September or early in the fourth quarter.

Kean said Wednesday that the company is “laser-focused” on completing the $4.5-billion sale.

“That process is going well,” he said on the conference call. “We have obtained some of the required regulatory approvals — and we are making progress on the remaining.”

Earlier this month, according to a work plan released by Kinder Morgan Canada, staking and clearing trees will take place in Alberta and the North Thompson area of B.C. in the next six months, as well as work on the tunnel portal at the Westridge Marine Terminal in Burnaby.

Other work includes creating stockpile sites, constructi­on yards and camps.

According to the National Energy Board, the project only has approval to proceed with constructi­on at Westridge, the Burnaby Terminal, various pump stations and various temporary infrastruc­ture sites.

The NEB has approved 68 per cent of the pipeline route.

Of the 1,179 permits needed from the B.C. government for the expansion project, 242 have been approved.

Another 266 permits that have been submitted are under review. And 671 permits have yet to be submitted.

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