Canada regulator denies Trans Mountain variance due to pipeline integrity, environmental concerns (updated)

Canada Energy Partners

20/12/2023 22:47

(Adds details of CER statement, background, paragraphs 4-12)
    By Nia Williams
       Dec 20 (Reuters) - The Canada Energy Regulator said on
Wednesday it denied a variance request from the Trans Mountain
expansion project because the application did not adequately
address concerns about pipeline integrity and environmental
protection impacts.
    Trans Mountain had asked to be allowed to install
smaller-diameter pipe in a 1.4-mile (2.3 km) section of the oil
pipeline's route after encountering "very challenging" drilling
conditions due to the hardness of the rock in a mountainous area
between Hope and Chilliwack in the province of British Columbia.
    The CER denied that request on Dec. 5. 
    In a statement outlining reasons for its decision, the CER
said it had concerns about the quality of materials Trans
Mountain planned to use, and that Trans Mountain did not
demonstrate how it would conduct in-line inspections or
adequately address potential environmental impacts.
    "These concerns outweighed the benefits for earlier
completion of the Trans Mountain Expansion Project (TMEP)," the
regulator said.
    Trans Mountain originally said granting the variance would
save 59 days of construction time.
    Last week the Canadian government-owned corporation asked
the regulator to reverse its variance decision on the grounds
that it could cause a "catastrophic" two-year delay and billions
of dollars in losses.
    Trans Mountain asked the CER to make a decision no later
than Jan. 9 to allow the project to stick to its current
construction schedule. 
    The expanded pipeline is meant to start shipping crude by
the end of the first quarter of 2024. The risk of further delays
is weighing on Canadian crude prices.
    The CER decision was yet another setback for the
long-delayed project, intended to triple shipments of crude from
Alberta to Canada's Pacific coast to 890,000 barrels per day
once it starts operating.
    Prime Minister Justin Trudeau's Liberal government bought
the troubled project in 2018 to ensure the expansion went ahead,
but costs have ballooned to C$30.9 billion ($23.11 billion),
more than four times the original budget.
 ($1 = 1.3369 Canadian dollars)

 (Reporting by Nia Williams in British Columbia and Ismail
Shakil in Ottawa
Editing by Chris Reese and Matthew Lewis)
 ((nia.williams@thomsonreuters.com; +1 403 531 1624; Reuters
Messaging: nia.williams.thomsonreuters.com@reuters.net))