Workers lay pipe during construction of the Trans Mountain pipeline expansion, in Abbotsford, B.C., on Wednesday, May 3, 2023. The Canada Energy Regulator has released its reasons for refusing a request by Trans Mountain Corp. for a pipeline variance. THE CANADIAN PRESS/Darryl Dyck
Canada’s energy sector as well as the country’s main oil-producing province celebrated Wednesday as the long-awaited $34-billion Trans Mountain pipeline expansion officially came online.
Crown corporation Trans Mountain Corp. issued a statement Wednesday confirming that oil is now moving on the expanded pipeline, which is currently 70 per cent full as crude continues to be added to the new system.
The company said the so-called “Golden Weld,” the final piece of construction work required to complete the pipeline, took place April 11 in B.C.’s Fraser Valley, between the communities of Hope and Chilliwack.
It said tanker ships will be able to load oil for delivery to Pacific and Asian markets by mid-May.
“Trans Mountain has demonstrated that challenging, long linear infrastructure can be built in Canada,” said Trans Mountain Corp. CEO Dawn Farrell in the statement.
“With our project management team and contractors, we were able to build 988 kilometres of new pipeline, 193 kilometres of reactivated pipeline, 12 new pump stations, 19 new storage tanks, and three new berths at Westridge Marine Terminal in Burnaby.”
“This is a great day for Canada, to get this pipeline up and running,” said Jon McKenzie, CEO of Cenovus Energy Inc. on a conference call with analysts Wednesday morning.
“The people of Canada are going to see the benefit for a long period of time in terms of increased taxes and royalties and the like.”
Alberta premier Danielle Smith also hailed the milestone, saying in a news release that the expanded pipeline means “a new era of prosperity and economic growth.”
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“The completion of TMX is monumental for Alberta,” Smith said.
“For Alberta this is a game-changer. The world needs more reliably and sustainably sourced Alberta energy, not less.”
The Trans Mountain pipeline expansion project involved twinning an existing pipeline that runs from Alberta to the B.C. coast. The expansion increases the Trans Mountain system’s shipping capacity from 300,000 barrels per day to 890,000 barrels per day, and will help open up global export markets for Canadian oil.
The increased capacity is also expected to help improve the price Canadian oil companies receive for their product.
But while the project’s completion is being hailed by Canada’s energy sector as a win, it did not come easily.
The pipeline expansion was first proposed in 2012 by Kinder Morgan Canada, which encountered so much environmental and Indigenous opposition that it ultimately threatened to scuttle the project.
The federal government purchased the pipeline for $4.5 billion in 2018 in an effort to get the project over the finish line. Once construction did start, the project ran into numerous delays and budget overruns, with its price tag spiralling over the course of four years to an eye-popping $34 billion.
Cenovus’ McKenzie said Wednesday he didn’t want to taint “a great day” with too much talk of the project’s challenges. But he suggested the difficulties encountered by Trans Mountain are indicative of a broader problem.
“I think as a nation we suffer — and I don’t think I’m saying anything that people don’t already know — from lower and decreasing productivity, and we need to find ways to get major projects built to get infrastructure built to the benefit of all Canadians,” McKenzie said.
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“And I think we would all realize that 13 years is far too long for a project of this national importance to get built.”
The cost and challenges associated with building Trans Mountain also cast a shadow over its ultimate sale. The federal government has indicated it does not wish to be the long-term owner of the pipeline, but the expansion project’s ballooning price tag means experts say the government will likely have to take a significant writedown if it is able to sell the asset.
The Trans Mountain saga has also left some wondering whether an oil pipeline will ever again be built in this country.
Industry watchers say the Trans Mountain expansion will reach its maximum capacity within just a handful of years, thanks to increased oil output by Canadian producers. But the time, cost and regulatory burden associated with building a similar project would be major investment barriers.
“It is increasingly difficult to build pipelines in this country, and it wouldn’t surprise me if this was the last pipeline,” McKenzie said.
“But the reality is we have a tremendous resource here in Canada and we produce our oil in my view, more sustainably than probably anywhere else in the world. And if we were in a position where, as a nation, we decided to take that to market, we should be building more pipelines.”
This report by The Canadian Press was first published May 1, 2024.
The Canadian Press
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