An Indigenous-led initiative is still pursuing ownership of the Trans Mountain pipeline, in spite of the project’s ballooning price tag.
“We are not going away, just because it’s $30.9 billion. We are entering into the early stages of negotiations,” said Stephen Mason, managing director of Project Reconciliation, a Calgary-based group that is working to facilitate the purchase of a major equity stake in the pipeline for the 129 First Nations along the route.
“Yes, there are a couple of other proponents out there, but I think the federal government has recognized our readiness.”
The Trans Mountain pipeline — Canada’s only pipeline system transporting oil from Alberta to the West Coast — 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.
Construction on the expansion is still ongoing, and it’s expected to be completed later this year.
However, capital costs of the project have been steadily spiralling. Last week, Trans Mountain Corp. announced its estimated price tag for the project has increased once again, this time to $30.9 billion — a 44 per cent increase from the $21.4-billion cost projection placed on the pipeline expansion project a year ago, and more than double an earlier estimate of $12.6 billion.
The federal government has indicated it does not wish to be the long-term owner of the pipeline, and has said it is open to the idea of Indigenous ownership.
But due to existing contractual agreements with oil shippers, only 20 to 25 per cent of the rising capital costs of the project can be passed on to oil companies in the form of increased tolls. (Tolls are the rates oil companies pay to ship product on a pipeline).
A report from the Parliamentary Budget Officer last June found the federal government stands to lose money from its investment in the pipeline, and suggested that if the project were cancelled at that time, the government would need to write off more than $14 billion in assets.
Mason did not say what his group is prepared to bid for a stake in the pipeline, but he said the ultimate selling price will only be what a buyer is willing to pay and will therefore reflect the anticipated return on investment.
“It’s commercial value. It doesn’t matter (who the buyer is), they will only pay what the commercial value is and what the tolls will support,” he said.