Canada's Trans Mountain oil pipeline's faces hearing on route change dispute

Canada Energy Partners

18/09/2023 11:00

By Nia Williams
       CALGARY, Alberta, Sept 18 (Reuters) - Canadian
regulators on Monday kicked off a two-day hearing to weigh up a
controversial route change request from the Trans Mountain
expansion (TMX) project that has sparked Indigenous opposition
and may lead to further delays for the key oil pipeline.
    After years of environmental opposition, regulatory hold-ups
and ballooning costs, Canadian government-owned TMX is nearing
completion and due to start shipping an extra 590,000 barrels
per day of crude from Alberta to Canada's Pacific coast in the
first quarter of 2024. 
    Canadian producers are eagerly awaiting the increased export
capacity that will open up access to markets in Asia and the
U.S. West Coast and help support heavy oil prices. 
    But last month Tran Mountain Corp (TMC), the crown
corporation building the expansion, asked the Canada Energy
Regulator (CER) to change the approved route on a 1.3-kilometre
(0.8 mile) section of pipeline near Kamloops, British Columbia,
to avoid planned micro-tunneling construction that it now says
is unfeasible.
    TMC's proposal to instead lay the pipeline through a
different area nearby, using horizontal directional drilling and
a conventional open trench, is being opposed by the
Stk'emlupsemc te Secwepemc Nation (SSN) First Nation, whose
territory the pipeline crosses.
    Last week, TMC said being forced to continue with the
micro-tunneling option could mean that segment of the pipeline
is not completed until December 2024, versus a January
completion date if the route adjustment is granted. Building the
micro-tunnel could cost as much C$86 million ($63.64 million),
the corporation added.
    Earlier this year, TMC estimated the entire expansion
project would cost C$30.9 billion, more than four times its
original budget, and warned the price tag could rise further.
    Concerns about TMX being delayed have already started
weighing on Canadian crude prices, as traders worry rising oil
sands production could get bottlenecked in Canada.
    The dispute will also likely complicate the Canadian
government's plan to sell the pipeline once construction is
finished. Trans Mountain was bought by Prime Minister Justin
Trudeau's Liberal government from Kinder Morgan Inc  KMI.N  in
2018 to ensure it got built.
    "It truly is a nightmare come true for the Canadian
government," said Morningstar analyst Stephen Ellis. "The
response of the SSN First Nation seems quite compelling and
detailed, and lays out Trans Mountain's shortfalls in a very
clear fashion."
    In letters already filed with regulators, the Indigenous
group says altering the route would disturb lands that hold
"profound spiritual and cultural significance", and it only
agreed to allow TMX to cross its territory in the first place
because of assurances the micro-tunneling would work.
        "Any support or consent that SSN has provided for the
Project has been based on conditions that explicitly protect the
Pípsell (Jacko Lake) Corridor from disturbance or harm," the SSN
said in an August filing.
  
    Ellis said it seemed likely the expansion project would be
delayed even if regulators grant TMC's request, echoing a letter
filed last week by Canadian Natural Resources Ltd  CNQ.TO , a
major shipper on the pipeline.
    The CER will hear arguments and cross-examinations from both
the SSN First Nation and TMC over two days in Calgary, and
extend the hearing to a third day if required.
    A CER spokeswoman said regulators will issue a decision as
soon as possible after considering all the evidence, and
recognized the time sensitivities associated with hearing. 

($1 = 1.3548 Canadian dollars)

 (Reporting by Nia Williams
Editing by Aurora Ellis)
 ((nia.williams@thomsonreuters.com; +1 403 531 1624; Reuters
Messaging: nia.williams.thomsonreuters.com@reuters.net))