CALGARY – 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, 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.
“I don’t know what legal challenges there may be,” Anderson said, but added 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 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 with 43 a year ago.
However, Morneau declined to say what steps Ottawa would take to ensure the project was completed and whether the federal government would use the army to enforce injunctions.
We expect discussion to begin soon, but it will take some time to structure and can only conclude once project risk has been effectively mitigatedChief Tony Alexis, Alexis Nakota Sioux Nation and Iron Coalition
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, which the company said was too great for a private company to deal with.
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.
“We expect discussion to begin soon, but it will take some time to structure and can only conclude once project risk has been effectively mitigated,” said Chief Tony Alexis, of the Alexis Nakota Sioux Nation and the Iron Coalition, which has expressed interest in buying a stake in the Trans Mountain pipeline.
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, these are the things that what we did,’ and he misread why the audience was there.”
But the news of a quick construction restart — prior to the coming federal election in October — is an unexpected positive for the Canadian energy sector, according to 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.
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