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Pipeline costs to rise $1.3 billion: study

By Stefania Seccia



Kinder Morgan’s Trans Mountain pipeline expansion will see building costs rise by $1.3 billion, according to a new study — potentially also costing Canadians billions of dollars in potential environmental impacts, lower oil production and transportation costs.

The Simon Fraser University study, entitled Public Interest Evaluation of the Trans Mountain Expansion Project, was commissioned by the Living Oceans Society and two other interveners for the upcoming National Energy Board hearings, which is to evaluate new evidence submitted by Kinder Morgan.

The study purports that the net cost to Canadians for this proposed pipeline could be $7.4 billion due to unused capacity ($4.4 billion), and $3.1 billion in environmental costs such as oil spills, air pollution, and emissions.

“Net costs could range between $4.6 and $23 billion based on different scenarios and assumptions,” the study states. “Fewer new transportation projects, higher oil production, and lower environmental costs reduce the net costs while more new transportation projects, lower oil production, and higher environmental impacts increase the net costs.

“Under all scenarios tested, construction of the (project) as planned will result in a net cost to Canada.”

The study states there are more oil transportation projects planned than required, and were “proposed before the current downturn in the oil markets and some were able to secure long-term shipping contracts that may allow these projects to be feasible financially.”

It would be cheaper for oil producers to ship undiluted bitumen by rail, according to the study.

Dr. Tom Gunton, of Simon Fraser University and the study’s lead author, said the study costs out oil spill damages, air pollution, greenhouse gas emissions and passive use damages “because there are reasonably reliable methods for estimating these costs.”

Gunton said, however, that the result is still conservative because it lacks “a number of environmental impacts that are more difficult to evaluate.”

The pipeline, along with other such proposed projects, would result in excess capacity until 2034, according to Gunton.

Kinder Morgan’s projected capital cost is $5.4 billion to twin the existing pipeline and increase capacity from 300,000 to 890,000 barrels per day.