$34B Trans Mountain expansion pipeline begins filling with oil with first shipments before Canada Day

The odyssey of developing and building the Trans Mountain expansion project in Western Canada is finally nearing the finishing line as sections of the pipeline begin filling with oil.

The first export shipment will happen before Canada Day, the federal Crown corporation said, although Alberta's premier expects it could become operational as soon as May.

The Trans Mountain is Canada's only oil pipeline to the West Coast. The project will transport oil from Alberta to the West Coast and triple the amount of crude that is shipped on an existing pipeline, from 300,000 barrels per day to 890,000 bpd.

Canadian oil prices are expected to increase once the new project is completed. Court challenges, regulatory hurdles, multiple protests and constant delays are all part of the history of the project, which began more than a decade ago.

Then there's the cost.

When the federal government stepped in to purchase the project six years ago and rescue it from life support, the estimated price tag was $7.4 billion. Today, expenses are $34 billion.

'What a long, strange trip it's been'

On stage Wednesday at the CERAWeek energy conference in Houston, Trans Mountain chief financial officer Mark Maki used a bit of humour when describing the project's past, knowing full well how eye-popping the cost escalation and multiple setbacks have been for Canadian taxpayers and the industry alike.

"I reflect on some lyrics from a Grateful Dead song: 'What a long, strange trip it's been.' Twelve years from beginning to in-service. That's too long," he said, drawing laughter from the crowd, before he proceeded to list the many challenges such as the regulatory process, the pandemic, floods and wildfires.

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Lessons could be learned on how the Trans Mountain expansion pipeline was developed and built, says company CFO Mark Maki.

Currently, less than 25 per cent of the pipeline is filled with oil, said Maki, in sections of where construction took place several years ago.

He suggests there should be a post-construction cost review to see what lessons can be learned about developing large-scale projects in Canada.

"It is expensive to do the project right. That's what it costs to build infrastructure," he said, in an interview with CBC News in Houston.

Pipelines cross long distances, and can impact several Indigenous communities and develop previously untouched land.

"For all those reasons, we have to understand better, whoever you are, what it really is going to cost to build infrastructure."

The final price tag, he said, could still change as remaining work is completed. The company has said it will need approximately three months following the completion of construction before it can provide a definitive cost estimate.

On Wednesday, Bloomberg reported a Chinese state-owned company, Sinochem Group, had purchased one of the first crude cargoes to move through the new pipeline.

Construction crews have focused recently on overcoming difficulties drilling through rock in B.C.'s Fraser Valley between Hope and Chilliwack and pulling the pipe into the hole.

The final piece of pipe is expected to be installed in the next few weeks, said Maki. Next steps include work on some above ground facilities, the testing and inspection process, and satisfying some regulatory requirements.

Despite all the issues over the years, Maki is adamant the project will have a positive impact on the oilpatch, the economy, Indigenous communities and government coffers.

"We're happy. We're getting to the end and that's a reason to be proud and we're doing something that I think is good for the country," he said.

Opposition to the project

Some environmental critics have argued the project will impact waterways and marine animals, while promoting expansion of the oil industry. The national regulator has previously said the project would cause "significant adverse environmental effects" on the southern resident killer whale population, while also highlighting the potential of a pipeline leak or tanker spill.

The expansion is expected to result in a seven-fold increase in the number of oil tankers traveling through the waters around Vancouver and Victoria.

Trans Mountain has support from dozens of Indigenous communities along the pipeline route, but others have been strongly opposed, even launching years-long court challenges. At one point, the project was halted because of a lack of consideration of Indigenous concerns.

Expanding domestic oil production

This year, Canada is expected to lead the world in oil production growth.

"It's going to make a big difference to our producers. It's going to make a big difference to us as a government since we charge our royalties based on [oil prices]," said Alberta Premier Danielle Smith, in an interview in Houston.

Prime Minister Justin Trudeau made the right decision to purchase the project six years ago, she said.

"I'm pleased that they stepped in to de-risk and finish the project," said Smith, adding how Ottawa ideally would have supported other pipelines to ensure they, too, were built, such as Energy East and Northern Gateway.

A complete Trans Mountain expansion will increase the amount of pipeline export capacity, although industry leaders say any spare space will be filled.

"Some were wondering, 'When TMX is done, will Enbridge not have as much supply going through its pipes?' We're hitting records. I expect that you'll see all of our assets continue to be used," said Enbridge's CEO Greg Ebel.

Some analysts have said the country's export pipelines could be full again in a few years, continuing the growing oil production in Western Canada.