Trans Mountain pipeline cost jumps by two-thirds to C$12.6 billion

The Canadian government-owned Trans Mountain oil pipeline is expected to cost C$12.6 billion ($9.47 billion) to expand, a sharp increase from the previous estimate of C$7.4 billion, the pipeline company's chief executive said on Friday.

Trans Mountain Corporation CEO Ian Anderson said the increase was due to court and regulatory delays, rising costs of steel, land, labor and security, and accommodations for indigenous groups who had raised concerns. The company decided to use thicker steel than it had previously planned for sensitive areas such as water crossings and changed its construction techniques to protect places that may have indigenous artifacts.

"As we moved on, it gets costlier and costlier," Anderson said on a conference call. "Time is money, market conditions have changed."

Even so, the expansion will be profitable from the first day it operates, he said. Its in-service date is now expected for December 2022, delayed from the previous estimate of the third quarter of that year.

The project will twin a 67-year-old pipeline and nearly triple capacity to 890,000 barrels per day moving from Alberta to a Pacific coast port near Vancouver.