(Reuters) The Canada Energy Regulator (CER) released its decisions for approving a route change application for the Trans Mountain pipeline expansion (TMX), a day after the corporation building the project warned of further construction challenges.
The CER said it approved Trans Mountain's request for a route deviation on a 0.8-mile section near Kamloops, British Columbia, because continuing to use micro-tunneling construction techniques would "most likely fail" and could delay completion of the oil pipeline by at least 10 months.
Canada regulator approved Trans Mountain pipeline route change over delay concerns
A pipe yard servicing government-owned oil pipeline operator Trans Mountain is seen in Kamloops, British Columbia, Canada
"This delay could result in an estimated $1.46 billion of lost revenue for Trans Mountain and cause negative impacts on shippers and other parties," the CER said.
Regulators granted the request from the Canadian government-owned Trans Mountain project in late September, despite opposition from the Stk'emlupsemc te Secwepemc Nation (SSN), whose traditional territory it crosses.
The CER did not release its reasons for the decision until now.
Regulators said there had been "adequate consultation and accommodation" with Indigenous peoples for the decision in Trans Mountain's favour.
Once operational, Trans Mountain will ship an extra 590,000 barrels per day of crude to Canada's Pacific Coast, opening up Asian and U.S. West Coast markets to oil producers. It is expected to start operating late in the first quarter of 2024 after years of regulatory delay and huge budget over-runs.
Trans Mountain informed the CER it has developed a contingency plan for installing another section of pipeline between Hope and Chilliwack, British Columbia, after encountering "very challenging" construction conditions due to the hardness of the rock it needs to drill through.
The contingency plan would involve installing a 30-inch diameter pipe instead of 36-inch as planned, and would shorten the installation schedule by approximately 55 to 60 days, Trans Mountain said in the filing.
