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The Trans Mountain oil pipeline expansion, which Canada is buying from Kinder Morgan Canada Ltd., would be profitable even if costs rose 26 per cent and the project took a year longer to complete.

If the cost of expanding the line increased to $9.3 billion (US$7.1 billion) and wasn’t in service until the end of 2021, the project still would generate $126 million in distributable cash flow the following year, according to a TD Securities analysis included in a Kinder Canada filing on Tuesday.

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The analysis may provide some comfort to the Canadian government, which agreed to buy the pipeline for $4.5 billion in May. When that deal was announced, Finance Minister Bill Morneau said there’d be no fiscal impact of the plan — suggesting he didn’t expect to make or lose money on the deal. At the time, he declined to say what construction costs would be for the expansion and downplayed concerns about finding a new buyer.

The Trans Mountain development has been beset by legal woes, environmental protests and provincial opposition. As of April 9, Kinder had invested $1.1 billion, including funds spent upgrading the Westridge Marine Terminal in Burnaby, British Columbia.

Bloomberg.com