On Thursday, Trans Mountain Corp., a government-owned oil pipeline corporation in Canada, submitted a request for regulatory approval of the fees it plans to charge shippers, which have previously stated that they are too expensive.
Trans Mountain stated in a petition to the Canada Energy Regulator (CER) that the pipeline operator would be responsible for covering two-thirds of any construction cost increases related to the pipeline’s long-delayed expansion project.
The project, which is scheduled to begin operating in 2024, will nearly triple the current flow of petroleum from Alberta to British Columbia’s Pacific Coast, from 360,000 to 890,000 barrels per day. Due to complications, the construction cost has increased to C$30.9 billion ($22.84 billion), about four times the original estimate.
Trans Mountain hopes to collect part of those expenses from shippers by charging tolls according to a formula established in a previous agreement.
“The approved toll methodology is essentially a cost risk-sharing framework, and Trans Mountain’s applied-for interim fixed tolls would result in Trans Mountain bearing more than two-thirds of the construction cost increases for the project since 2017,” wrote Trans Mountain’s lawyer Sander Duncanson in the filing.
Duncanson argued that the CER should temporarily authorize the tolls until additional evaluation at a later hearing.
“There is no evidentiary or legal basis for the (CER) to relieve the shippers from their corresponding obligations under the (agreement),” he added.
Canada’s largest oil producer, Canadian Natural Resources, and China’s state-owned oil giant, PetroChina, are among the shippers who have pushed for tolls based on other variables.
Trans Mountain informed the CER last week that the expansion may be delayed by up to nine months if a route variation request is not approved by regulators.
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