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Energy

Transmountain Pipeline Expansion Project a success?

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5 minute read

From the Frontier Centre for Public Policy

By Chris Bloomer

 

The Transmountain Mountain Pipeline expansion project (TMEP) was completed on May 01, 2024. Its startup the following month ended an eleven-year saga of tectonic federal energy policy initiatives, climate change requirements, federal regulatory restructuring, and indigenous reconciliation. That it was finished at all is a triumph, but there was muted celebration.

The original proponent for TMEP was Kinder Morgan (KM), who filed its application with the federal energy regulator in 2013. The expansion would be constructed in the existing right of way of the existing pipeline and increase capacity from 300,000 barrels of oil and refined products to 890,000 barrels of oil per day. This included expansion of the existing dock and loading facilities. Protests began virtually the next day. The cost estimate at that time was $7.4 billion for the 1,150 km pipeline and related facilities. The federal regulator and the federal government approved the project in 2016.

Between 2016 and 2018, the intensity of the protests against TMEP and a new government formed in British Columbia that vowed it would use any means possible to make sure TMX would not be built created significant hurdles. KM warned that the protest’s impact and B.C.’s regulatory and legal challenges were creating significant uncertainty, and the project would be delayed at least a year, stopping all non-essential spending. Ultimately KM decided it would not continue with the project because of the increased execution risk and cost to complete the project that the legal and regulatory challenges, and increasing protests, posed.

The project’s shelving by KM led to the federal government acquiring all the Kinder Morgan assets, including TM for $4.7 billion in 2018. Construction then began in 2019.  The execution risks remained the same with the legal and regulatory challenges. They were compounded by a legal challenge to the substance of the federal government’s consultation with indigenous people, which was their constitutional duty. The courts agreed that the federal government had not met its constitutional duty to consult and ordered that it be redone. This led to further delays and in 2020 the cost estimate increased to $12.6 billion, then increased again to $21.4 billion in 2022. Ultimately, the federal regulator imposed 157 conditions on TMEP that it had to meet before it could operate.

COVID, extensive flooding and regulatory delays led to a further cost increase up to $30.9 billion in 2023. The final updated cost increased to $34 billion in 2024 due to labour costs, inflation, and materials delays.

The foregoing “Coles notes” version of events sets out the challenges endured by TMX as of Thursday, May 23, 2024. It also highlights that delays in a major project like TMEP have a massive impact on costs. But what gets lost in all this is that in 2013 KM, a public company, made a commercial decision to proceed with the project. There was and still is a huge market pull for the pipeline and the incremental oil volumes. There is huge economic and strategic value for Canada that will benefit all sectors of the economy and indigenous communities, who will most likely end with significant pipeline ownership.

Market access for Canada’s oil production in the Pacific markets will change the oil trading dynamics and value for Canadian production. Canada has the third largest oil reserves in the world. Canada is among the best in its class for environmental, safety, social and governance of its energy production. Canada is also among the best in pipeline construction and safety. So, who best to execute a monumental project like TMX?

We need to reflect and admire the skill, diligence, and perseverance of everyone involved with bringing to fruition TMX as a world class, state of the art major piece of energy infrastructure.

Yes, TMX is a success but the process through which it had to persevere was a failure and we should reflect and learn from it. In the end, despite the final cost, Canada will reap the economic benefits from TMX for decades because the world needs oil and Canada has lots of it.

Chris Bloomer is a board member of FCPP and the former president and CEO of the Canadian Energy Pipeline Association. He has held senior executive positions in the energy industry in Canada and internationally.

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Daily Caller

Key Trump Cabinet Nominees Face A Daunting Energy Policy Mess

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From the Daily Caller News Foundation

By David Blackmon

Just so we can frame this for everyone in the room, China will build 100 new coal plants this year. There is not a clean energy race. There is an energy race.

After a week spent watching hours of the various Senate confirmation hearings for some of President-elect Donald Trump’s cabinet nominees, one compelling thought lingers with me more than any other: Does Democrat Sen. Mazie Hirono of Hawaii have a seat on every Senate committee?

The answer to that is “no,” but it seemed that way as the Senator began her questioning of nominees ranging from Pete Hegseth (Defense) to former Florida Attorney General Pam Bondi (Justice) to former Republican North Dakota Gov. Doug Burgum (Interior) to Chris Wright (Energy) by posing some iteration of the following question: “ … since you became a legal adult, have you ever made unwanted requests for sexual favors or committed any verbal or physical harassment or assault of a sexual nature?”

Sadly, Hirono’s farcical style of questioning turned out to be less of an exception than a rule among the Democratic members of these committees as the week wore on. Democrat Sen. Tim Kaine of Virginia ended his questioning of Hegseth by literally asking if he had ever beaten his wife, an obvious smear which Hegseth denied.

It was all sad to witness, a troubling indicator of the health of both the Democratic Party and the American Republic. But what it all revealed by Friday is that the Democrats are unlikely to claim any scalps from among this week’s slate of nominees. Where energy policy is concerned, that means that the three departments/agencies that are most impactful in that realm are likely to be led by former Republican Rep. Lee Zeldin of New York at the Environmental Protection Agency (EPA), Burgum at the Department of the Interior and Wright at the Department of Energy.

Seldom if ever in this country’s history have three more capable, knowledgeable and effective individuals been in positions of leadership to help reform and recover from the waste and misallocation of taxpayer dollars that have characterized President Joe Biden’s 4-year presidency.

I have written several times here that the inevitable outcome that will result from pretty much every aspect of the Biden Green New Deal policies will be to render America dependent on China for its energy security, due to Chinese dominance of global processing and supply chains for all forms of and raw materials for renewable energy and electric vehicles. This is obviously not a sustainable situation, and it is clear that Trump and his key nominees fully understand that reality.

U.S. dependency on foreign adversaries is not limited to China. One such area involving a different country holds high stakes related to the goal of a renaissance in nuclear power often touted by Republicans and some Democrats alike.

In a revealing exchange, Wright and Republican Sen. John Barrasso of Wyoming discussed America’s recent dependence on Russia, of all countries, for imports of enriched uranium. As Wright pointed out, this is a technology first invented in the United States, but our country has virtually no existing capacity for uranium enrichment today. This is, as Wright called it, “a sad state of affairs” that has been caused in large part by wrong-headed federal environmental and permitting policies.

Unfortunately, the Biden cure for this pressing energy security matter could be even worse. As U.S. and NATO sanctions have gradually shut down Russia’s exports of enriched uranium, the U.S. nuclear industry has become reliant on imports from — you guessed it — China.

“As those [sanctions] shut down Russian uranium … we see more imports from China,” Wright testified. “We need to get beyond that … without shutting down the nuclear power plants we have running today. It is an area that requires urgent action.”

In another revealing exchange, Trump’s nominee for Treasury Secretary, Scott Bessent, disagreed with Democrat Sen. Ron Wyden of Oregon about the Senator’s claim that the United States is involved in “an arms race on clean energy” with China.

“Senator Wyden, just so we can frame this for everyone in the room, China will build 100 new coal plants this year. There is not a clean energy race. There is an energy race,” Bessent replied. Truer words were never spoken, and it is impossible to win that energy race when the United States is increasingly dependent on China for its very energy needs.

These and other Trump nominees have an enormous mess to clean up from the profligate spending and waste of the Biden years. Fortunately for the country, their work begins Monday. Not a moment too soon.

David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.

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Alberta

Before Trudeau Blames Alberta, Perhaps He Should Look in the Mirror

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From EnergyNow.ca

By William Lacey

There has been a lot of talk about how Premier Danielle Smith did not sign a statement of support with the Government of Canada regarding a unified response to any tariff action taken by incoming President of the United States, Donald Trump.

Trudeau singles out Alberta premier for not putting ‘Canada first’ in break with other provinces

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While it is easy to throw stones at Premier Smith and call her actions one of selfishness, placing the interests of Alberta ahead of Canada, I think there are a number of reasons why one could reply that she was well within her right to act as she did. Over the last decade, Trudeau has gone out of his way to vilify the oil and gas industry, through his continual bad mouthing of the industry as being antiquated, and implementing policies that ensured that capital flight from the space accelerated, infrastructure projects were cancelled and massive levels of uncertainty were overlaid on the investment landscape going forward. Despite all this, the oil and gas sector still remains one of the most important economic contributors to the economy and is the largest component of exports from Canada to the United States, and it isn’t even close.

The Observatory of Economic Complexity (OEC)

The ironic thing of all this? To get oil to the refineries in the east, you need to IMPORT it by pipeline from the United States or primarily by ship to Quebec and New Brunswick. Had the Energy East Pipeline been built, Canadian refineries could have had Canadian domiciled product to satiate them. Moreover, had Northern Gateway been built, we would have diversified our client list beyond the United States. Sure, the Trans Mountain Pipeline was built, at extraordinary cost and timelines, and some “credit” is due to the Government getting it done, but the proof is in the current landscape that we operate in.

Now, coming back to the beginning. Why do I think Trudeau should look in the mirror before throwing rocks at Premier Smith? I come back to 2015 when Trudeau said Canada is the world’s “first postnational state” and that “there is no core identity, no mainstream in Canada.” He has gone about taking away what many of us grew up with, namely a sense of Canadian identity, and tried to replace that with shame and no collective identity. What is a post nation state you may ask? Post-nationalism or non-nationalism is the process or trend by which nation states and national identities lose their importance relative to cross-nation and self-organized or supranational and global entities as well as local entities.

So, is it any wonder that people are starting to question what is Canadian any more? At a time when Canada is under significant threat, the irony that Alberta likely represents the best tool in this tools (Trudeau) economic toolbox, is wildly ironic. As they say, karma’s a bitch.

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