Canada’s Trans Mountain oil pipeline may cost more, face delays: proxy

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VANCOUVER (Reuters) – Kinder Morgan Canada Ltd (KML.TO) documents filed on Tuesday suggest expanding the Trans Mountain pipeline will cost more than current estimates and could take longer than expected to complete.

In a report filed with U.S. regulators as part of Kinder Morgan’s sale of the Trans Mountain assets to the Canadian government, the company’s financial adviser contemplated possible capital cost increases of C$1 billion to C$1.9 billion ($766,000 to $1.5 billion), and a delay of up to one year to December 2021.

Kinder Morgan has not provided a cost update since March 2017 despite numerous project delays to the C$7.4 billion project. It said the figures, produced by TD Securities, “should not be taken as forecasts.”

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Canada agreed in May to buy the Trans Mountain assets for C$4.5 billion to save the controversial expansion, which will nearly triple capacity on the line from oil-rich Alberta to British Columbia’s coast.

The deal is now expected to close late in the third quarter or early in the fourth quarter of 2018, according to a proxy filing with the U.S. Securities and Exchange Commission. It was previously expected to close this summer.

Canada’s Finance Ministry did not immediately reply to a request for comment.

Work on the Trans Mountain expansion has been repeatedly delayed by permitting issues and political opposition. Kinder Morgan halted all non-essential work in April, citing project risks.

Canada will fund the resumption of construction work on the expansion under a covered credit facility until the deal closes, the company said.

Canada’s Finance Ministry did not immediately reply to a request for comment.

Work on the Trans Mountain expansion has been repeatedly delayed by permitting issues and political opposition. Kinder Morgan halted all non-essential work in April, citing project risks.

Canada will fund the resumption of construction work on the expansion under a covered credit facility until the deal closes, the company said.

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