Providing coverage of Alaska and northern Canada's oil and gas industry
June 2020

Vol. 25, No.26 Week of June 28, 2020

Trans Mountain travails

Despite final government approval, construction proceeding, court ruling looms

Gary Park

for Petroleum News

It’s been two years since the Canadian government stunned taxpayers by announcing its acquisition for C$4.5 billion of the Trans Mountain pipeline system, effectively taking control of the TMX project to triple capacity on the line to 890,000 barrels per day.

That was superficially a bold step by the administration of Prime Minister Justin Trudeau to relieve Kinder Morgan’s of its troubled ownership and, for Alberta oil producers, a chance to assure them of gaining vital access to offshore markets, while overcoming constant interference from environmentalists and some First Nations, who defied regulatory approvals and court injunctions and threatened to blockade construction.

Industry and Alberta government hopes of seeing completion of the expansion work for the C$12.6 billion TMX got a decisive lift a year ago when the federal government gave its final approval to the plans, subject to meeting 156 conditions enforced by the Canadian Energy Regulator.

All the signs pointed to completion of the pipeline by mid-2022 and construction of a new Westridge Marine Terminal in the Port of Vancouver within three years.

A further lift came from a proposal by New Brunswick’s Irving Oil to ship crude by tanker from Westridge along the Pacific Coast, through the Panama Canal and north to the company’s Atlantic refinery - a hedge against doubts that Trans Mountain crude would ever find a market in China.

Work on the 710-mile line has started to gather pace in the last month, with completion of the Alberta leg on track, followed in June by a start on the British Columbia section.

Ian Anderson, chief executive officer of Trans Mountain, called the British Columbia development “another key milestone ... on the path to building this critical piece of infrastructure.”

Not quite ‘all systems go’

The message being whispered among Trans Mountain supporters was “all systems go.” Not quite.

Three British Columbia First Nations voiced their unhappiness that construction was being rammed through in the midst of COVID-19 health measures limiting the size of any protests, although the TMX opponents made final submissions to the Supreme Court of Canada in mid-May, arguing consultations with Trans Mountain had fallen short of pledges. The court is not expected to decide until late summer or early fall whether it will hear the case.

Countering the dissenting First Nations, Trans Mountain has reached agreements on land access, jobs and economic benefits with 19 British Columbia communities covering 95% of the pipeline route.

But Trans Mountain never seems able to overcome its obstacles.

Take mid-June as the latest example when the existing 300,000 bpd pipeline was forced to shut down after an oil spill was discovered at the Abbotsford pumping station just east of Vancouver.

Trans Mountain said the spill estimated at 940 to 1,195 barrels of light crude was traced to a one-inch piece of pipe and lasted 36 hours until the system was returned to full operating capacity.

The company said free-standing oil was recovered and disposed of at an approved facility, while monitoring did not identify any risk to ground water or the community.

British Columbia Environment Minister George Heyman, once a resolute opponent of the Trans Mountain plan, said only that his government would insist that the CER ensure Trans Mountain took full responsibility for “negative environmental or other impacts.”

First Nation frustration

Sumas First Nation Chief Dalton Silver, who said the system has had four spills in 15 years, was frustrated that he had not be able to get accurate information on the incident and was not told that the pipeline had restarted.

The Coldwater First Nation, which is concerned about the impact of increased oil tankers on endangered killer whales, said the spill “brings a little bit more concern” to the issues his community has with the pipeline.

Even if this event turns into a minor footnote, tensions are likely to build as pipeline construction moves closer to the Vancouver region, when the chances of illegal protests are likely to gather strength. That could rapidly turn into Trans Mountain’s ultimate test.

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