Trans Mountain Corp. has given its prime contractors a notice to proceed, which may go some way to addressing fears the Canadian expansion project would miss another summer construction window.
The SAF Group, a Canadian private equity investment firm, had recently warned the project could miss a summer construction window. There are seasonal fisheries and migratory bird windows within which the company must work.
In June, Trans Mountain had asked the National Energy Board (NEB) for permission to start construction on the Westridge Marine Terminal expansion in Burnaby by August 5.
“The terminal work will be entirely located on land owned by Trans Mountain and it needs to commence by August 5 to avoid seasonal restrictions,” Trans Mountain said in its application to the NEB.
On August 1, the NEB granted the permission. But as of last week, the work had still not started.
“There is an increasing risk that TMX misses this construction season,” SAF Group warned in a brief.
But on August 21, Trans Mountain announced it had given its prime contractors a notice to proceed.
This gives prime contractors 30 days to mobilize equipment and start hiring workers, developing detailed work plans and begin procuring goods and services.
“With the first wave of regulatory approvals complete, we are confident that we have a path forward by which the expansion project construction can commence,” said Trans Mountain president Ian Anderson.
Trans Mountain says that hiring by prime contractors is already underway. An estimated 4,200 workers are expected to be employed along the pipeline corridor by the end of this year.
There are still numerous permits that will be needed for some spreads. While the John Horgan government has made it clear that it has provided all statutory permits and will continue to do so, in the past the City of Burnaby has refused to issue municipal permits, forcing Trans Mountain to get the NEB to override municipal bylaws.
“The timelines for approval of all outstanding regulatory matters could have an impact on project costs, schedules and final in-service dates,” Trans Mountain said in a news release. “However, if approvals are received as anticipated, the Trans Mountain Expansion Project will be in-service by mid-2022.”
Alberta Premier Jason Kenney said the notice to proceed is a “step forward,” but is urging governments at all levels to ensure the project is not held up by activists.
“As Trans Mountain begins to prepare for its construction restart, the federal and local authorities must ensure the rule of law is enforced and that construction is not illegally blocked,” he said in a press release.
“History has shown us that there are a small minority of individuals who are willing to break the law to prevent responsible resource development in Canada, and they must not be allowed to essentially veto a project that is vitally important – not only to Alberta, but to all of Canada.”
The $9.3 billion question is just how much a year-long delay caused by the courts will add to the twinning project’s final capital costs.
When it was approved, the estimated capital cost was $7.4 billion. But the project was halted for about a year when the Federal Court of Appeal quashed federal approval of the expansion, sending both the federal government and the NEB back to the drawing board to address two key issues raised by the court – First Nations consultations and marine impacts from increased oil tanker traffic.
Ottawa’s Parliamentary Budget Officer (PBO) estimates that for every year’s delay the value of the twinning project will drop by about $693 million. The PBO has warned that the final capital cost of the expansion could be as high as $9.3 billion.
Trans Mountain has not yet provided an update to the project’s anticipated final capital costs.
The twinning project will add a second line to the existing Trans Mountain pipeline, which runs from Edmonton to Burnaby. The expansion will increase the pipeline’s capacity from 300,000 barrels per day to 890,000 barrels per day.