Regulator rules in favour of Trans Mountain route deviation

The Canada Energy Regulator has approved Trans Mountain Corp.'s application to modify the pipeline's route, a decision that could spare the government-owned pipeline project from an additional nine-month delay.

The regulator made the ruling Monday, just one week after hearing oral arguments from Trans Mountain and a B.C. First Nation that opposes the route change.

It didn't release the reasons for its decision Monday, saying those will be publicized in the coming weeks.

By siding with Trans Mountain Corp., the regulator is allowing the pipeline company to alter the route slightly for a 1.3-kilometre stretch of pipe in the Jacko Lake area near Kamloops, B.C., as well as the construction method for that section.

Trans Mountain Corp. had said it ran into engineering difficulties in the area related to the construction of a tunnel, and warned that sticking to the original route could result in up to a nine-month delay in the pipeline's completion, as well as an additional $86 million in project costs.

Trans Mountain has been hoping to have the pipeline completed by early 2024.

But Trans Mountain's application was opposed by the Stk'emlupsemc te Secwepemc Nation, whose traditional territory the pipeline crosses and who had only agreed to the originally proposed route.

In their regulatory filing, the First Nation stated the area has "profound spiritual and cultural significance" to their people, and that they only consented to the pipeline's construction with the understanding that Trans Mountain would minimize surface disturbances by implementing specific trenchless construction methods.

The Stk'emlupsemc te Secwepemc Nation argued that Trans Mountain never said its originally proposed construction method was impossible, only that it couldn't be done in time to meet a 1 Jan. in-service date for the pipeline.

The First Nation didn't respond to a request for comment by publication time.

The Trans Mountain pipeline is Canada's only pipeline system transporting oil from Alberta to the West Coast. Its expansion, which is currently underway, will boost the pipeline's capacity to 890,000 barrels per day (bpd) from 300,000 bpd currently.

The pipeline — which 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 and regulatory hurdles — has already been plagued by construction-related challenges and delays.

Its projected price tag has since spiralled: first to $12.6 billion, then to $21.4 billion and most recently to $30.9 billion (the most recent capital cost estimate, as of March of this year).

The federal government has already approved a total of $13 billion in loan guarantees to help Trans Mountain secure the financing to cover the cost overruns.

Trans Mountain Corp. has blamed its budget problems on a variety of factors, including inflation, COVID-19, labour and supply chain challenges, flooding in B.C. and unexpected major archeological discoveries along the route.

Keith Stewart with Greenpeace Canada said it's alarming to see the regulator overrule the wishes of Indigenous people in order to complete a pipeline on deadline.

"Every Canadian should be outraged that our public regulator is allowing a publicly owned pipeline to break a promise to Indigenous people to protect lands of spiritual and cultural significance," Stewart said.

The federal government has already approved a total of $13 billion in loan guarantees to help Trans Mountain secure the financing to cover the cost overruns.

Trans Mountain Corp. has blamed its budget problems on a variety of factors, including inflation, COVID-19, labour and supply chain challenges, flooding in B.C. and unexpected major archeological discoveries along the route.

Given the Canadian regulatory system has a reputation for being slow and cumbersome, it was surprising to see the Canada Energy Regulator rule so quickly on Trans Mountain's route deviation request, said Richard Masson, executive fellow with the University of Calgary's School of Public Policy.

"It's a challenging decision to have to make, when you've got a $30 billion pipeline that needs to be completed," Masson said.

"If there's no feasible way to do that tunnel, then I guess you have to allow for this."

Masson added that if the regulator had denied Trans Mountain's request, it would have been bad news for taxpayers as well as the federal government, which is seeking to divest the pipeline and has already entered into negotiations with several interested Indigenous-led buyers.

It also would have been bad news for Canadian oil companies, who have been eagerly anticipating the pipeline's start date to begin shipping barrels to customers.

"If this can result in the pipeline being completed by year-end and started up in the first quarter, that's good news. The world is still looking for oil, and oil prices are up at $90 US a barrel," Masson said.