Federal Regulator Explains Trans Mountain Pipeline Route Change

The Canada Energy Regulator has disclosed the reasoning behind its decision from last month that permitted Trans Mountain Corp. to proceed with a pipeline route deviation in opposition to a British Columbian First Nation’s requests.

The regulator agreed with Crown Corporation’s standpoint in reasons released Friday, saying that having to stick to a previously agreed-upon route and construction method regardless of the difficulties that came across tunnelling through that area could end up in unacceptable delays and cost increases.

The regulator acknowledged Trans Mountain’s claim that rejecting the request to deviate from the planned route would cause substantial delays in the project. This delay would lead to a big financial loss of hundreds of millions of dollars for Trans Mountain and adversely impact oil shippers.

Canada’s only pipeline transporting oil from Alberta to the West Coast is the Trans Mountain pipeline, and since 2018, it has been under federal government ownership. The government acquired the pipeline to ensure the completion of its intended expansion, a project that was stopped by the previous owner, Kinder Morgan Canada Inc.

The expansion project will increase the pipeline’s capacity from 300,000 to 890,000 barrels per day and improve export opportunities for Canadian oil companies.

However, Trans Mountain Corp. submitted a request earlier this year to significantly adjust the route of a 1.3-kilometer piece of pipeline to be built in the Jacko Lake area near Kamloops and to use traditional trenching methods.

The company stated that it had encountered engineering challenges in the area of tunnel construction and that if it was not allowed to change its original plan, it would be unable to fulfill the pipeline’s scheduled in-service date of early 2024.

Last month, the Canada Energy Regulator made a ruling that favoured Trans Mountain, speeding it and promising to disclose the reasons behind it later.

According to the regulator’s explanation of its decision on Friday, it was accepted by Trans Mountain that being forced to try tunnelling in the initially suggested area could cause a delay of up to 10 months and cost the company up to $2 billion in lost operating revenue.

Trans Mountain can proceed with the route deviation, the regulator said, but it will still be expected to respect its agreements with the First Nation by improving reclamation standards, minimizing overall disturbance in the area, and continuing to set aside time to communicate with and involve the First Nation throughout the process.