In August, 2022, Trans Mountain recently completed installation of new pipeline and the replacement of an existing segment under the Coquihalla River. The work was done simultaneously to minimize impact to the environment and neighbours. LinkedIn/Trans Mountain
By Amanda Stephenson in Calgary
An Indigenous-led initiative is still pursuing ownership of the Trans Mountain pipeline, in spite of the project’s ballooning price tag.
“We are not going away, just because it’s $30.9 billion. We are entering into the early stages of negotiations,” said Stephen Mason, managing director of Project Reconciliation, a Calgary-based group that is working to facilitate the purchase of a major equity stake in the pipeline for the 129 First Nations along the route.
“Yes, there are a couple of other proponents out there, but I think the federal government has recognized our readiness.”
The Trans Mountain pipeline — Canada’s only pipeline system transporting oil from Alberta to the West Coast — was bought by the federal government for $4.5 billion in 2018 after previous owner Kinder Morgan Canada Inc. threatened to scrap the pipeline’s planned expansion project in the face of environmentalist opposition.
Construction on the expansion is still ongoing, and is expected to be completed later this year.
However, capital costs of the project have been steadily spiralling. Last week, Trans Mountain Corp. announced its estimated price tag for the project has increased once again, this time to $30.9 billion — a 44 per cent increase from the $21.4 billion cost projection placed on the pipeline expansion project a year ago, and more than double an earlier estimate of $12.6 billion.
The federal government has indicated it does not wish to be the long-term owner of the pipeline, and has said it is open to the idea of Indigenous ownership.
But due to existing contractual agreements with oil shippers, only 20 per cent to 25 per cent of the rising capital costs of the project can be passed on to oil companies in the form of increased tolls. (Tolls are the rates oil companies pay to shift product on a pipeline, and they are how the pipeline company makes money).
A report from the Parliamentary Budget Officer last June found the federal government stands to lose money from its investment in the pipeline, and suggested that if the project were cancelled at that time, the government would need to write off more than $14 billion in assets.
Mason did not say what his group is prepared to bid for a stake in the pipeline, but he said the ultimate selling price will only be what a buyer is willing to pay and will therefore reflect the anticipated return on investment.
“It’s commercial value. It doesn’t matter (who the buyer is), they will only pay what the commercial value is and what the tolls will support,” he said.
Project Reconciliation is pursuing a “minimum of a 30 per cent equity stake” in Trans Mountain, Mason said, which would mean not just economic benefits for Indigenous communities but Indigenous governance leadership through the Trans Mountain Corp. board of directors.
An equity stake that large in a major piece of energy infrastructure in this country would be precedent-setting for Indigenous communities. By contrast, the Coastal GasLink pipeline, which is also currently under construction, has option agreements in place with 16 Indigenous communities for a 10 per cent equity stake.
Some environmentalists have suggested that as the world begins to move away from fossil fuels in the coming decades, the Trans Mountain pipeline could become a stranded asset and a liability to whoever owns it.
But Mason said Friday that access to revenue streams from today’s fossil fuel industry will give Indigenous communities the ability to invest in tomorrow’s energy innovations.
“That corridor is a valuable corridor to move what will be the next generation of energy, whether it be in the form of ammonia or pure hydrogen. That corridor is very expensive real estate,” Mason said.
“As I’ve had conversations with chiefs, you want to own this now. Because as soon as that switch flips that we’re now moving hydrogen … the cost to get in will be way too high.”
Other groups — including a partnership formed by Western Indigenous Pipeline Group and its industry partner, Pembina Pipeline Corp. — have previously expressed interest in pursuing an Indigenous-led stake in the pipeline.
Mason said while the construction of the Trans Mountain expansion is “getting close to the last spike,” the negotiation of a sale is extremely complex and will take a significant amount of time.
The federal government itself has not yet announced any type of formal divestment process.
“As we get closer to summer, I think that’s going to be more where the serious discussions start,” Mason said.
“This is one of the biggest transactions in Canadian history. I’d be very surprised if it could be closed within a year.”
This report by The Canadian Press was first published March 17, 2023.
The Canadian Press
- 0084 EMP Metals Pipeline Online0084 EMP Metals Pipeline Online
- 0053 Kingston Midstream Westspur Alameda Click0053 Kingston Midstream Westspur Alameda Click
- 0082 CsHM 2024 Pipeline0082 CsHM 2024 Pipeline
- 0077 Caprice Resources Stand Up For Free Speech0077 Caprice Resources Stand Up For Free Speech
- 0076 Latus only0076 Latus only
- 0061 SIMSA 2024 For Sask Buy Sask0061 SIMSA 2024 For Sask Buy Sask
- 0055 Smart Power Be Smart with your Power office0055 Smart Power Be Smart with your Power office
- 0051 JML Hiring Pumpjack assembly0051 JML Hiring Pumpjack assembly
- 0049 Scotsburn Dental soft guitar0049 Scotsburn Dental soft guitar
- 0046 City of Estevan This is Estevan0046 City of Estevan This is Estevan
- 0041 DEEP Since 2018 now we are going to build0041 DEEP Since 2018 now we are going to build
- 0032 IWS Summer hiring rock trailer music
- 0022 Grimes winter hiring
- 0021 OSY Rentals S8 Promo
- 0018 IWS Hiring Royal Summer
- 0013 Panther Drilling PO ad 03 top drive rigs
- 0011
- 0006 JK Junior
- 0002 gilliss casing services0002 gilliss casing services
- 9002 Pipeline Online 30 sec EBEX9002 Pipeline Online 30 sec EBEX
- 9001
Pipeline Online provides the in-depth coverage on energy issues in this province that no other media comes close to. However, with recent threats from Facebook to block news links, it’s important to follow Pipeline Online in other manners. The easiest is to check each morning at PipelineOnline.ca, with the top story posted at 7 a.m. Monday to Friday, and additional coverage throughout the day and weekend. But you can also follow on LinkedIn and Twitter. You can follow editor Brian Zinchuk online at LinkedIn as well (you’ll see more stories that way). Finally, you can subscribe to a weekly newsletter.