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The estimated cost of completing the Trans Mountain pipeline expansion has ballooned from an initial estimate of $7.4 billion to $12.6 billion, the company said Friday.

President and CEO Ian Anderson confirmed the new cost in a conference that also delivered an update on the project’s construction.

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The new figure includes $8.4 billion in construction costs and additional $1.7 billion in financial carrying costs. The company is also recommending an additional $600-million contingency fund “for cost impacts beyond the control of Trans Mountain.”

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Anderson said the additional costs were the result of the pipeline expansion being “a different project” than when the last formal cost estimate was made in 2017 under previous owners Kinder Morgan. But he said the final cost would have been the same, no matter who owned the title.

1:29 Cost of Trans Mountain pipeline expansion balloons to $12.6B Cost of Trans Mountain pipeline expansion balloons to $12.6B

They’ve spent short of $2.5B on the project so far, it’s anticipated they will spend an additional $8.4B to complete the project, and potentially another $1.2B in other costs before completion. Total project is expected to cost $12.1B in the end. #YYC #YEG #TMX @GlobalCalgary — Adam MacVicar (@AdamMacVicar) February 7, 2020

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“The cost increase has really come about through two primary drivers, one being the starting and stopping of construction, the cost of delays, the carrying cost, the additional regulatory and legal processes,” he said.

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“And the other being the many project changes and enhancements and market conditions that we face, with the project here now in 2020, versus the one that was thought to be our project back in 2017.”

1:51 Trans Mountain pipeline expansion now estimated to cost $12.6B, finish in 2022 Trans Mountain pipeline expansion now estimated to cost $12.6B, finish in 2022

According to Trans Mountain, the costs also include the installation of fibre optic cable along the route for its spill detection technology, which comes at a cost of $70 million.

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Anderson said due to that process, the company is bringing internet connections to communities without access.

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The company has already spent $2.5 billion on the project, which has included the cost of delays and additional regulatory processes.

Anderson couldn’t say how the new projected cost would affect the pipeline’s eventual sale, but said economics continued to work in the company’s favour and he expected a significant cash flow as soon as the line is activated.

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Anderson said he expects the expanded project’s gross earnings in the first year of operation to exceed $1.5 billion, and grow annually.

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He also touted increasing Indigenous buy-in to the pipeline expansion. Anderson said the number of Indigenous groups to sign deals with the company has grown from 43 in 2017 to 58, for agreements worth about $500 million.

Another question about benefits to indigenous communities: TMX CEO says there is money going to indigenous communities, training has been put in place in these communities, they’ve hired over 20 indigenous monitors to help with the project as well. #YYC #YEG #TMX @GlobalCalgary — Adam MacVicar (@AdamMacVicar) February 7, 2020

Finance Minister Bill Morneau said the current version of the project included major safety and environmental upgrades from what was proposed in 2017.

He told reporters Friday that he was confident it would provide good value for money.

“This was in the range of considerations that we looked at. Of course the project will develop $1.5 billion dollars of available cash flow once it’s finished,” said Morneau.

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“Which means it remains commercially viable, and I think very interesting for the eventual commercial buyers that we’re going to be seeking, because we don’t plan on keeping this in government hands.”

Morneau argued the project would remain an “important driver” in Canada’s transition to cleaner energy, saying profits from the project will be used to fund clean energy projects.

Opposition MPs strongly criticized the project’s rising costs and the federal government’s role in buying the pipeline.

“Ian Anderson has confirmed exactly what conservatives have been warning, exactly what the parliamentary budget officer warned, and exactly what economists have warned,” Conservative MP Shannon Stubbs said. “Which is that the Trans Mountain expansion will now cost way more than what the Liberals currently indicated.”

Stubbs is calling on the government to release concrete plans with full cost estimates, as well as its plan to sell the project upon its completion.

“The Liberals bought it unnecessarily, now they have made Canadians the owner of the pipeline unnecessarily,” Stubbs said. “So they have to tell Canadians it’s on them not on the rest of us, exactly how they’re going to ensure the Trans Mountain expansion gets built.”

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Alberta Environment Minister Jason Nixon suggested a backstop of $2 billion promised by the previous provincial NDP government was not on the table.

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“At the end of the day, we see this as the federal government’s responsibility,” he said. “We’re in this situation because of their political failure and we expect them to get the job done that they’ve promised Albertans.”

On Friday afternoon, Alberta government officials confirmed that Alberta finance minister Travis Toews spoke with Morneau, and there was no request for Alberta to provide funds to help with the costs.

According to Trans Mountain officials, 80 per cent of the pipeline’s capacity has already been sold to major oil producers, many of them – like Cenovus and Suncor – are in Alberta.

Alberta Premier Jason Kenney, in Washington D.C. for meetings with government officials, said the news of increased project costs is unfortunate.

“This is a result of Kinder Morgan leaving the country and the government ended up holding the bag, it’s also the result of endless delays,” Kenney said. “A project like this should be done in two or three years not 10 or 12 years.”

News of the increased project cost drew immediate fire from project opponents.

“Canada’s largest fossil fuel subsidy just got way more expensive,” said Peter McCartney, with the Wilderness Committee.

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“How much do costs need to skyrocket for Trans Mountain before Prime Minister Trudeau admits Big Oil is extorting the public and cuts our losses?”

But Duane Bratt, a political scientist at Mount Royal University in Calgary, doesn’t foresee the increased costs hurting support for the pipeline, at least in Alberta.

“Trans Mountain has taken on an importance that far exceeded its economic value, it’s almost become an identity issue in the province,” Bratt said. “We’ll see how much people care about this in two weeks time, those who oppose it will bring it up all the time.”

The company says it has a much clearer construction and completion timeline.

Anderson said the company now anticipates completing the project by 2022, with construction started on all parts of the line by the end of 2020.

“I’ve got a high degree of confidence we can deliver on the schedule,” said Anderson.

He said work is already underway in both Alberta and the Westridge Marine Terminal in Burnaby, B.C., with more than 2,900 workers currently employed. At the estimated peak in 2021, Anderson estimated the project would employ 5,500 workers.

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Opponents have attacked the greenhouse gas emission and oil spill risks of the pipeline project but they’ve also charged it will be a money-loser with unproved markets in Asia that could fail financially and leave the public holding the bag.

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Anderson says the company is recommending that Ottawa, as owner and lender, set aside a further $600 million reserve for cost impacts beyond the control of Trans Mountain.

Opponents of the pipeline expansion have vowed to do whatever it takes to stop the project despite losing a legal challenge before the Federal Court of Appeal earlier this week.

The four First Nations who lost the court challenge on Tuesday have 60 days to seek leave to appeal to the Supreme Court of Canada. The expansion project would triple the capacity of the existing pipeline between Edmonton and a shipping terminal in Burnaby, B.C.

-With files from the Canadian Press