Canadian regulators on Monday launched a two-day hearing to assess a controversial request to reroute the Trans Mountain (TMX) expansion project, which has sparked indigenous opposition and could lead to further delays for the main pipeline. .
After years of environmental opposition, regulatory blockages and exorbitant costs, the Canadian government-owned TMX project is nearing completion and is expected to begin shipping an additional 590,000 barrels per day of crude from Alberta to the Pacific coast of Canada in the first quarter of 2024.
Canadian producers are looking forward to increased export capacity that will open access to markets in Asia and the U.S. West Coast and help support heavy oil prices.
But last month, Tran Mountain Corp (TMC), the Crown corporation building the expansion, asked the Canada Energy Regulator (CER) to modify the approved route on a 1.3 kilometer section (0.8 mile) pipeline near Kamloops, British Columbia, to avoid the planned construction of micro-tunnels is now infeasible.
TMC’s proposal to lay the pipeline in a different area nearby, using horizontal directional drilling and a conventional open trench, is opposed by the Stk’emlupsemc te Secwepemc Nation (SSN) First Nation, whose territory crosses the pipeline.
Last week, TMC said being forced to pursue the micro-tunnel option could mean the pipeline segment would not be completed until December 2024, compared to a January completion date if the adjustment of the route is granted. Construction of the microtunnel could cost up to $86 million, the company added.
Earlier this year, TMC estimated that the entire expansion project would cost $30.9 billion, more than four times its original budget, and warned that the price could rise further.
Concerns over the TMX delay have already started to weigh on Canadian crude prices, as traders fear growing oilsands production could be hampered in Canada.
The dispute will also likely complicate the Canadian government’s plan to sell the pipeline once construction is complete. Trans Mountain was purchased by Prime Minister Justin Trudeau’s Liberal government from Kinder Morgan Inc in 2018 to secure its construction.
“This is truly a nightmare come true for the Canadian government,” said Morningstar analyst Stephen Ellis. “The SSN First Nation’s response appears to be quite compelling and detailed, and sets out Trans Mountain’s shortcomings very clearly. »
In letters already filed with regulators, the Indigenous group says changing the route would disturb lands that have “deep spiritual and cultural significance,” and it only agreed to allow TMX to cross its territory. firstly because he had the assurance that the micro-tunnel would allow work.
“Any support or consent provided by SSN for the project is based on conditions that explicitly protect the Pípsell (Jacko Lake) corridor from disruption or damage,” SSN said in an August filing.
Ellis said it seemed likely the expansion project would be delayed even if regulators granted TMC’s request, echoing a letter filed last week by Canadian Natural Resources Ltd, a major shipper of the pipeline.
The Authority will hear arguments and cross-examinations from the SSN First Nation and TMC over two days in Calgary and will extend the hearing to a third day if necessary.
A CER spokeswoman said regulators would make a decision as soon as possible after considering all the evidence, and acknowledged the time sensitivities associated with the hearing.
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