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Canada's Trans Mountain Expansion crude oil pipeline needs more funds as construction costs have skyrocketed, Canada's federal government said on Friday.
"Given the significant expenditures expected ... [Trans Mountain Corporation] will require the continued availability of future financing in order to proceed with the project," the Canada Development Investment Corporation (CDEV) said in its 2022 annual report.
The Trans Mountain Pipeline was due for an expansion years ago, but the former owner, Kinder Morgan, was planning on killing in the project so the federal government stepped in and forced Trans Mountain Corporation to finish the project. In 2017, the project was estimated at C$7.4 billion, but by March 2023, the estimated costs had ballooned to a staggering C$30.9 billion—or $22.3 billion.
The company has attributed the increased costs in part to inflation, supply chain challenges, and labor shortages.
The project is about 80% complete, with an expected in-service date of early next year. That is, if the financial issues are sorted in time.
As of the end of 2022, Trans Mountain Corporation owned the federal government C$16.1, nearly three-fourths of which were construction-related costs for the new line.
Now, TMC is estimating that it will take another C$9.1 billion this year, but it has nearly exhausted its credit limits.
The federal government has stated that it is not interested in long-term ownership of the two Trans Mountain lines, but according to Argus, the government may be unable to recoup its investments.
The Trans Mountain pipeline is expected to help Canada overcome its constrained pipeline capacity and open new markets by nearly doubling the amount of oil capable of flowing through the system, at 890,000 bpd.
The pipeline continues to face climate opposition.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.