Show them the money.Just weeks ahead of its official startup, the main shippers on the Trans Mountain pipeline expansion are demanding answers as to why costs for the project have more than quintupled and continue to climb.In filings with the Canadian Energy Regulator (CER), Canada’s largest oil sands producers — Canadian Natural Resources, Cenovus, Suncor, BP, Marathon and PetroChina — filed a joint statement demanding a “full and adequate” breakdown of the entire project cost schedule since 2017.The point is to determine how much — if any — of the nearly $25 billion in overruns they should be responsible for to get their barrels from Alberta to tidewater in Burnaby in the form of higher tolls..“Effectively, Trans Mountain wants the (CER) and participating shippers to take its word that it properly allocated costs, determined root causes of cost growth and assessed whether costs were (or will be) reasonably and necessarily incurred,”.“The stakes are high: billions of dollars at issue, with Trans Mountain’s uncapped costs (estimated and incurred) having more than quintupled since 2017 and its costs are still growing by billions, seemingly unchecked,” reads the statement. And yet, they complained Trans Mountain has refused to answer most of their information requests and inappropriately dismissed them as irrelevant “fishing expeditions” even after it announced another 10% cost hike — $3.1 billion — last month.They said Trans Mountain has refused to provide any work papers showing its calculations, contractor communications or accounting data validating those costs or internal documentsDetailing its “contemporaneous” decision-making. “Effectively, Trans Mountain wants the (CER) and participating shippers to take its word that it properly allocated costs, determined root causes of cost growth and assessed whether costs were (or will be) reasonably and necessarily incurred,” it said.“Requiring Trans Mountain to produce the requested information is reasonable — especially in proportion to Trans Mountain’s request for shippers to pay billions of dollars in uncapped cost overruns through the commencement date toll.”.Those proposed tolls have more than doubled from $5.76 per barrel in 2017 when the contracts were signed to around $10.88 as of 2023. The difference could determine the economic viability of the pipeline or whether it would be cheaper to leave the oil in the ground.The shippers are requesting an order compelling the taxpayer-owned company to provide full disclosure ahead of toll hearings later this year. It blames the pandemic, weather-related flooding and other unforeseen events for the ballooning budget.That’s notwithstanding that both the shippers and the company are eager to start filling it with oil starting in April. When it is finally complete, it will add more than half a million barrels a day of additional export capacity and narrow price differentials for Canadian crude which will in turn increase royalty revenues for the Alberta government.Premier Danielle Smith said she personally thanked Prime Minister Justin Trudeau for his help in finally finishing the project — albeit five years late — when they met in Calgary on Wednesday.
Show them the money.Just weeks ahead of its official startup, the main shippers on the Trans Mountain pipeline expansion are demanding answers as to why costs for the project have more than quintupled and continue to climb.In filings with the Canadian Energy Regulator (CER), Canada’s largest oil sands producers — Canadian Natural Resources, Cenovus, Suncor, BP, Marathon and PetroChina — filed a joint statement demanding a “full and adequate” breakdown of the entire project cost schedule since 2017.The point is to determine how much — if any — of the nearly $25 billion in overruns they should be responsible for to get their barrels from Alberta to tidewater in Burnaby in the form of higher tolls..“Effectively, Trans Mountain wants the (CER) and participating shippers to take its word that it properly allocated costs, determined root causes of cost growth and assessed whether costs were (or will be) reasonably and necessarily incurred,”.“The stakes are high: billions of dollars at issue, with Trans Mountain’s uncapped costs (estimated and incurred) having more than quintupled since 2017 and its costs are still growing by billions, seemingly unchecked,” reads the statement. And yet, they complained Trans Mountain has refused to answer most of their information requests and inappropriately dismissed them as irrelevant “fishing expeditions” even after it announced another 10% cost hike — $3.1 billion — last month.They said Trans Mountain has refused to provide any work papers showing its calculations, contractor communications or accounting data validating those costs or internal documentsDetailing its “contemporaneous” decision-making. “Effectively, Trans Mountain wants the (CER) and participating shippers to take its word that it properly allocated costs, determined root causes of cost growth and assessed whether costs were (or will be) reasonably and necessarily incurred,” it said.“Requiring Trans Mountain to produce the requested information is reasonable — especially in proportion to Trans Mountain’s request for shippers to pay billions of dollars in uncapped cost overruns through the commencement date toll.”.Those proposed tolls have more than doubled from $5.76 per barrel in 2017 when the contracts were signed to around $10.88 as of 2023. The difference could determine the economic viability of the pipeline or whether it would be cheaper to leave the oil in the ground.The shippers are requesting an order compelling the taxpayer-owned company to provide full disclosure ahead of toll hearings later this year. It blames the pandemic, weather-related flooding and other unforeseen events for the ballooning budget.That’s notwithstanding that both the shippers and the company are eager to start filling it with oil starting in April. When it is finally complete, it will add more than half a million barrels a day of additional export capacity and narrow price differentials for Canadian crude which will in turn increase royalty revenues for the Alberta government.Premier Danielle Smith said she personally thanked Prime Minister Justin Trudeau for his help in finally finishing the project — albeit five years late — when they met in Calgary on Wednesday.
