CALGARY — Kinder Morgan Canada’s controversial Trans Mountain pipeline expansion has encountered further delays, the company said Wednesday, citing ongoing permitting issues.
Kinder Morgan had initially expected the $7.4 billion project, which will carry 590,000 barrels of oil per day from Alberta to Burnaby, B.C. to be in service by late 2019, but now is targeting December 2020 for start-up.
“We expect the NEB to issue another decision in the near future on establishing a fair, transparent and expedited backstop process for resolving any similar delays in other provincial and municipal permitting processes, but at this stage we are still pursuing a primarily permitting strategy for the project, and are now projecting an unmitigated delay to a December 2020 in-service date,” Kinder Morgan Canada chairman Steve Kean said in a release.
“We also acknowledged the need to see more progress before it would be prudent to ramp up to full construction spending,” Kean said during a fourth-quarter earnings call.
Kean said that a December ruling from the National Energy Board was a positive development because it allowed Kinder Morgan Canada to bypass some local permitting processes in places like Burnaby, which had refused to grant construction permits.
“Local governments are not typically in opposition,” Kean said of Burnaby, and added the project can now proceed even without Burnaby’s permits. “It is essential for us to know that we can move forward even if local governments are opposed,” he said.
Kinder Morgan has also applied to the NEB to establish a similar process for the company to get necessary permits from other opposed governments.
“We expect the NEB to issue another decision in the near future on establishing a fair, transparent and expedited backstop process for resolving any similar delays in other provincial and municipal permitting processes,” Kean said in a release.
Major oilsands producers including Suncor Energy Inc. and Canadian Natural Resources Ltd. have committed to send their barrels down the pipeline, which the Calgary oilpatch believes is necessary for Canadian producers to get a higher price for their oil.
Environmentalist groups in British Columbia have opposed the project, which they have said will contribute to climate change and over concerns that bitumen would sink if it spilled in the ocean or in the province’s waterways.
Kean said during the earnings call that the need for the pipeline expansion project had only increased as Canadian heavy oil prices have fallen as all export pipelines out of Alberta are operating at full capacity.
“We hear every day from our customers and other stakeholders about how critical this project is,” Kinder Morgan Canada president Ian Anderson said in a release.
The earnings release was not entirely negative for Kinder Morgan’s Canadian business, which posted higher profits.
Kinder Morgan Canada reported $46.4 million in net income in the fourth quarter, which was more double the $17.8 million it earned at the same time last year.
The company’s revenues were also up, but by a more modest 5 per cent to $183.6 million in the fourth quarter from $174.2 million last year.
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