IMPACT CANADA
Each month we will focus on projects that will help create more jobs, more profit, and more economic and social opportunities for Alberta and the rest of Canada.
FOCUS: THE TRANSMOUNTAIN PIPELINE EXPANSION
The Trans Mountain Pipeline system (the “Pipeline”) carries crude and refined oil from Alberta to the coast of British Columbia. The Pipeline was built in 1953 and continues to operate efficiently to this day, with a capacity of 300,000 barrels per day.
Up to 2018, the Canadian division of the Kinder Morgan Energy Partners (“Kinder Morgan”) owned the pipeline. In 2013, Kinder Morgan proposed to expand the capacity to 890.\,000 barrels per day by adding a parallel second trench of line.
Some of the key facts about the Pipeline expansion include the following:
- Approximately 980 km of new pipeline will be built
- Twelve new pump stations and 19 new tanks will be added to storage terminals
- The existing pipeline will continue to carry refined products, synthetic crude oils and light crude oils, while the extension will focus on carrying heavier oils
- The project is expected to cost approximately $7.4 billion
- The project will create short- and long-term jobs and job-related training opportunities
- Particularly, during the construction phase, approximately 15,000 people will be contracted and an equivalent of 37,000 indirect and direct jobs attributable to operations will be created
- The Pipeline expansion will generate approximately $2.34 billion in revenue per year
- These funds can be redistributed towards provincial healthcare and education, and Alberta specifically is expected to be allocated approximately 40% of the share each year
- 80% of the capacity of the Pipeline expansion is already secured by long term commitments (15 to 20-year contracts), by companies such as Athabasca Oil Corporation, Cenovus Energy Inc. and Imperial Oil Limited
As with the Keystone XL Pipeline, this expansion has faced significant opposition since its introduction in 2013.
Indigenous groups have provided legal challenges, as the Pipeline expansion would encroach on territories of 15 First Nation communities. Concerns were raised about potential spills of the materially increased production transported, and the type of effect these incidents would have on salmon populations, cultural and spiritual areas. Further, most groups felt that they were not adequately consulted when the proposed plan was put into place. Unfortunately, this eventually led to the Court of Appeal overturning the National Energy Board’s decision to approve the expansion.
As a result, by 2018, the project was at crossroads. With Kinder Morgan looking to divest itself of the pipeline and the project, Justin Trudeau’s Federal Government stepped up to the table. In May 2018, the government announced its intent to purchase the line for $4.5 billion from Kinder Morgan. Few months later, in August of 2018, the Kinder Morgan shareholders approved the sale. The government now had to work with the Indigenous groups on proper consultations, in order to ensure that the project was eventually approved. Consultations, known as Phase III, began, this time ensuring that Indigenous groups were appropriately represented at tables as heads of any major discussions and process decisions that took place.
Eventually, the collaboration between the Federal Government and its cornerstone stakeholders prevailed on June 18, 2019, when the National Energy Board was directed to issue the certificate, allowing for the construction and operation of the Trans Mountain Expansion Project.
Further, environmental protection plans have been developed along the entire route to ensure that there are no further bottlenecks in the construction process.
Steve Dimic
If you have any additional inquiries regarding any of the topics or if you have ideas for future topics, please feel free to email me at [email protected].