Trans Mountain Pipeline Expansion Completed, but Canadian Government Faces Challenges in Selling It

The Trans Mountain pipeline expansion project, which aims to transport oil from Alberta to the Pacific Coast, has been completed after years of construction and delays. The Canadian federal government, which owns the pipeline, celebrated the project's 'golden weld' marking the expansion's completion. However, the government now faces significant challenges in selling the pipeline, with construction costs exceeding $34 billion.

The expanded pipeline is expected to start commercial operations in less than two weeks and will protect Alberta's growing heavy-oil production from steeper discounts by providing increased capacity. The Clearwater play, a newer and lower-cost source of heavy crude compared to the oil sands, has multiple layers that can be tapped, providing opportunities for increased production. Tamarack Valley Energy, a company that specializes in the Clearwater play, believes that more pipeline capacity is needed to satisfy the growth in the sector.

Why this matters: The completion of the Trans Mountain pipeline expansion has significant implications for Canada's oil industry and the country's economy. The increased pipeline capacity is crucial for Alberta's heavy-oil producers to access new markets and avoid steep discounts. However, the challenges faced by the Canadian government in selling the pipeline raise questions about the project's long-term viability and the potential impact on taxpayers.

Despite the completion of the expansion, the Canadian government faces several hurdles in selling the pipeline. The timing of the sale, finding suitable buyers, and determining an appropriate price are among the key challenges. The construction costs, which have exceeded $34 billion, further complicate the sale process. Additionally, there are concerns from the public, particularly in British Columbia, about the environmental risks associated with the pipeline.

The Canadian oil sector could expand further if it had more pipeline capacity, with an Indigenous-led project allowing more access to the Pacific Coast being seen as the ideal scenario. "If we could get another pipeline, that would be the best thing for our industry," said Brian Schmidt, CEO of Tamarack Valley Energy.

Key Takeaways

• Trans Mountain pipeline expansion completed after years of delays.
• Expanded pipeline to start operations in 2 weeks, increasing capacity.
• Canadian govt faces challenges selling pipeline, with costs exceeding $34B.
• Increased pipeline capacity crucial for Alberta's heavy-oil producers.
• Indigenous-led pipeline project seen as ideal for further industry expansion.