According to the company, the latest surge in the capex has been driven by high global inflation and supply chain challenges around the world, floods in British Columbia, challenging terrain between Merritt and Hope, and unexpected major archaeological discoveries among others
Trans Mountain revealed that the capital expenditure (capex) of the Trans Mountain expansion project in Canada is now estimated at C$30.9bn ($22.5bn), which is an increase of 44% on the previous estimate.
In February 2022, the cost of the pipeline expansion project was estimated at C$21.4bn ($15.6bn), which itself was a 70% increase from the prior estimate of C$12.6bn ($9.2bn).
Trans Mountain, the holding company of the oil products pipeline, is owned by the Canadian government.
According to the company, the latest surge in the capex has been driven by high global inflation and supply chain challenges around the world.
The company has also cited floods in British Columbia, challenging terrain between Merritt and Hope, unexpected major archaeological discoveries, and earthquake standards in the Burnaby Mountain tunnel among others.
Trans Mountain president and CEO Dawn Farrell said: “Canada has among the world’s highest standards for the protection of people, the environment, and Indigenous participation when building major infrastructure projects.
“By including these commitments into the Project design and development from the beginning, we have ensured the Project will provide economic benefits to Canadians well into the future.”
Construction of the Trans Mountain Expansion Project is nearly 80% complete. This includes laying 787km of pipe in the ground, the installation of 12 pump stations and over 40,000 welds, and completion of 50 key trenchless crossings.
The expansion project officially broke ground in December 2019 and involves the twinning of the existing 1,150km-long Trans Mountain pipeline between British Columbia and Alberta.
The mechanical completion of the project is anticipated to occur at the end of this year. The expanded pipeline is slated to begin operations in Q1 2024.
Post-completion, the expanded Trans Mountain pipeline system will almost triple its capacity by an increase of 590,000 barrels per day to a total of 890,000 barrels per day.
Trans Mountain said that it is in the process of obtaining financing from external sources to meet the remaining cost of the expansion project. Last year, the Canadian government said that it will not invest any additional public money in the project despite the capex increase.
The Canadian government acquired the Trans Mountain pipeline system and its expansion project in 2018 from Kinder Morgan Canada for C$4.5bn ($3.3bn).