Owners of Canada's two multi-billion-dollar energy pipeline projects recently announced key completion milestones in their long-running construction sagas, but bumps still loom.
TC Energy said Oct. 30 it has finished construction on the 670-kilometer Coastal GasLink in British Columbia—spanning two mountain ranges and 800 water crossings, including 10 that involved major trenchless technology efforts—to carry natural gas to the giant LNG Canada export terminal now being built in Kitimat.
The installation "is the last step before mechanical completion, which is well on track for our year-end target," the firm said. System testing is also set to finish by then before pressurized gas is introduced in pipeline sections, with reclamation and other environmental steps to continue into 2024, it added.
ENR 2023 Top Owners Sourcebook (PDF)
ENR 2023 Top Owners Sourcebook (Articles)
But delays and cost hikes on the now five-year, $10.6-billion project have strained relations between TC Energy and Shell-managed LNG Canada. TC Energy has blamed the project's cost doubling since 2018 on a skilled labor shortage, soil erosion and performance issues of some subcontractors.
Gas Line's Challenges
Coastal GasLink has been noted for innovative project ownership outreach to indigenous nations but it also has been targeted by tribal opponents and other protestors over environmental and other concerns, including a 2022 attack on a worksite, possibly involving anarchist group members, which forced workers to flee and caused millions in project damage, according to police and an April CBC account.
“We are disappointed with the increase in the Coastal GasLink project costs,” TC Energy CEO François Poirier said in a statement earlier this year. “We continue to be laser-focused on safely completing this critical piece of energy infrastructure at the lowest possible cost, which will enable Canada’s first direct path for LNG exports.”
An LNG Canada spokesman said the effort by the JGC-Fluor contracting joint venture to build the estimated $13.2-billion first phase of the terminal to export 14 million tons per year of domestic gas by mid-decade is 85% done and that pipeline progress “aligns with [its] needs."
He said commissioning and startup is set to start next year but will take 12 months to complete. LNG Canada has not yet made a final investment decision on whether to build the project's second phase.
Some market observers speculate the schedule could accelerate. "Based on everything that we’re hearing and seeing, LNG Canada may start taking some test gas volumes by the middle of next year,” RBN Energy Managing Director Martin King told Bloomberg last month.
The terminal, and other smaller ones being developed separately, would enable direct Canadian gas shipments to lucrative Asian markets, eliminating dependence on U.S. Gulf Coast export facilities.
But the Institute for Energy Economics and Financial Analysis cautioned earlier this year that the high costs are creating new financial risks.
Trans Mountain Oil Line Finish
While also beleaguered by inflation, labor and supply chain challenges, the federally owned Trans Mountain oil line expansion project in British Columbia said it is progressing to targeted mechanical completion this year, with commercial operation set for next spring.
The estimated $22.5 billion project will add 980 km to the line ending at the coast, nearly tripling capacity to 890,000 barrels per day and offering the country's first Pacific Ocean oil shipping site.
The project secured regulatory sign-off in October for a proposed route change on a 1.3-km section near Kamloops, B.C. Project executives had speculated that denied approval for the change would hike the final price by $86 million. The Auditor General of Canada expressed concern in its 2022-2023 financial report about rising project costs, and Finance Minister Chrystia Freeland last year said no more public funds would be invested.
But in August, federal agency Export Development Canada revealed on its website a federal guarantee of commercial loans up to $2.2 billion for the project, which followed guarantees earlier this year and in 2022 for larger amounts. The federal government has spent about $25.7 billion in public funds in the project, Reuters said last month, with observers speculating whether it will be able to recover the investment.
The Trudeau government bought the line in 2018 to ensure the expansion was done. In a poll conducted in October by the West Coast Environmental Law advocacy group, more than two-thirds of Canadians opposed paying for pipeline cost overruns.
But more construction challenges remain. The federal energy regulator ordered work to halt Nov. 2 in a wetland area near Abbotsford, B.C., citing non-compliance with environmental and safety rules. "Trans Mountain is working hard to correct all non-compliances and to prevent reoccurrence,” it said.
Project officials have also warned of potential problems with micro-tunneling techniques that could delay finish by at least 10 months.
Even with the challenges of these high-profile projects and changing national views on fossil fuel infrastructure, new Canadian projects are making headway. Two parallel gas pipelines proposed by a developer from British Columbia's Montney gas reserve to Alberta, each 215 miles long, were recommended for approval by the federal energy regulator on Oct. 31, although subject to 49 construction conditions.
Alberta Premier Danielle Smith, in outlining upcoming government priorities last month, also said the province would enact sovereignty legislation to counter Prime Minister Justin Trudeau plans to cap greenhouse gas emissions in the oil and gas sector, and to make the power grid net zero by 2035, which she said was not realistic.