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Since the Canadian government purchased the Trans Mountain pipeline there have been constant delays and rising construction costs. This in turn will affect how much the overall final sale price is and that the government will end up overpaying if construction delays continue.

In August of 2018 when Ottawa purchased the Trans Mountain Pipeline from Kinder Morgan Inc. they payed $4.4 billion. This was on the higher end of the parliamentary budget officer’s (PBO) estimate. The PBO estimated the project value at $3.6 billion to $4.6 billion range.

With every year the Trans Mountain pipeline is delayed, its net present worth goes down by $1.5 billion. With a projected finish date of 2023 that could mean a large loss for the project especially if the current 10% rise in construction costs continues to climb. If the government was to sell the project in its current state they could make an estimated $2.8 billion.

The shortage of pipelines in Canada has already put strain on major Canadian oil and gas producers. Since Canada hit its peak of exiting crude oil in 2017, prices have made a substantial decline which affects Canada’s ability to remain competitive in the oil and gas industry. Canada is attracting more uncertainty, and not investment.

“In an interview with the National Post on Wednesday January 30th, Natural Resources Minister Amarjeet Sohi said he has met with roughly 40 heads of First Nations communities as part of Ottawa’s ongoing negotiations. He said the latest round of consultations, which began shortly after the Federal Court ruling, will be more conversational and better account for community concerns.”

In January, the National Energy board released their draft conditions and Federal Government recommendations pertaining to the Trans Mountain Pipeline. These conditions and recommendations include what the public would deem necessary or desirable for the project to move forward, as well as taking better measures to ensure the project related marine shipping is at a minimum. On February 22, the National Energy Board is set to release their report on the Trans Mountain Pipeline and its impact to marine life on the West Coast. From this report, the federal cabinet will make their decision to either approve or deny the reconsideration of the pipeline.

 

SOURCES:

https://nationalpost.com/news/ottawa-paid-sticker-price-for-trans-mountain-construction-delays-to-erode-pipelines-value

https://www.neb-one.gc.ca/bts/nws/whtnw/2019/2019-01-10-eng.html

https://www.international.gc.ca/investors-investisseurs/assets/pdfs/download/Oil_and_Gas.pdf 

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