xʷməθkʷəy̓əm (Musqueam), Skwxwú7mesh (Squamish) & səl̓ilwətaʔɬ (Tsleil-Waututh) Territories/VANCOUVER
Today, Trans Mountain Corporation announced that the construction cost for the embattled Trans Mountain Expansion Pipeline and Tanker Project (TMX) has skyrocketed to $21.4 billion and the project will be delayed into 2023 at least. This update comes more than two years after the last cost update, which predicted a cost of $12.6 billion. Combined with the $4.5 billion purchase from Kinder Morgan in 2018, the cost is now over $25 billion.
“This latest increase confirms our analysis of last year, but we take no pleasure in being right this time. The new price tag – four times the original estimate – means that TMX’s already collapsed business case is worse than ever, and the cost will probably increase further,” said Eugene Kung of West Coast Environmental Law.
“We know that the toll structure means that only 25% of the cost overruns will be fully recouped from TMX’s customers – the oil producers. This represents another hand out to the oil and gas sector and will make it harder to sell the project to the private sector operating on a commercial basis,” said Kung.
A press release from the Minister of Finance stated that no further public money would be spent on TMX. The Canada Account credit facility was increased to $9.6 billion on December 31, 2021, according to the CDEV Q3 2021 report.
“The Canada Account is designed to support projects that are too risky for the private sector. This should be a huge red flag for any would-be buyers,” continued Kung. “It appears that Minister Freeland now understands how fraught TMX’s economics are by lowering expectations from TMX being ‘extremely profitable’ to hoping to recoup public dollars with a ‘potential for positive financial return’. Shutting off the taps of government financial support means that financing TMX construction will increase costs further for the Crown Corporation as TMX becomes a political liability as well as a financial liability.”
A recent poll from Abacus Data showed that 59% of Canadians do not support spending any more than $12.6 billion on Trans Mountain construction, and only 7% support spending more than $20 billion.
“It is outrageous that TMX’s cost has nearly doubled in two years with very little oversight. Especially since the so-called economic benefits were used to justify the infringement of Indigenous rights, the significant climate impacts of building oil and gas expansion infrastructure, and the devastating effects on wildlife like salmons and orcas,” said Kung.
The Parliamentary Budget Officer calculated that a 10% increase in construction costs or a one-year delay (based on $9.3B) would render the project uneconomic. With both of these events now greatly surpassed, the commercial viability of this project is as bad as it has ever been, and it is likely to get worse.
“It’s time to recognize TMX for the tragic boondoggle it is, cut our losses and cancel this white elephant of a project,” concluded Kung.
For more information, contact:
Eugene Kung, Staff Lawyer, West Coast Environmental Law Association