Trans Mountain workers deal with flooding in the area of an exposed section of pipeline. (Trans Mountain)

Federal government should reconsider TMX in the wake of massive floods: lawyer

Continuing to push the pipeline through is "insanity," says Eugene Kung, staff lawyer with West Coast Environmental Law.

By Dustin Godfrey | December 9, 2021 |6:47 am

The floods that plagued BC starting last month are a two-fold reason for reconsidering the Trans Mountain pipeline expansion, according to an environmental lawyer.

On the one hand, the floods are a reminder of the very real impacts of climate change, caused broadly by fossil fuels like oil. And on the other hand, the monetary cost of the pipeline will likely increase with the disastrous weather event.

West Coast Environmental Law put out a report in September this year indicating the cost of the pipeline expansion had “almost certainly” gone up by millions of dollars since the latest estimate from Trans Mountain.

That’s in large part because of delays in all seven sections of the pipeline, ranging from two to 23 months.

“These delays have a cascading effect as much of the work must be sequenced (ie. right of way clearing must happen before pipeline construction),” the report reads.

No cost update in nearly two years

Now, Eugene Kung, one of the authors of the report and a staff lawyer with the firm, has come out with a blog post suggesting the flooding from the storms that drenched the province last month will only compound on those delays and added costs.

Trans Mountain hasn’t released an estimate of the construction costs of TMX since February 2020—closing in on two years ago—with the latest figure at $12.6 billion. That was an increase, at the time, of the previous estimate of $9.6 billion.

But in their September report, West Coast Environmental Law estimated the true cost of construction, which could run “well into 2023,” could approach $20 billion.

Among those delays was a four-month stop-work this year from Environment and Climate Change Canada over the destruction of an Anna’s hummingbird nest on the site in the Brunette River area. The federal ministry further halted all tree-clearing work on the project for a shorter time period during the Burnaby stop-work order.

With just 37% of the pipeline completed, the company has already spent $9.9 billion on construction, as of the end of September this year. The company noted in a written statement to Burnaby Beacon that the expansion project is now 55% completed.

Trans Mountain workers deal with flooding in the area of an exposed section of pipeline. (Trans Mountain)
Trans Mountain workers deal with flooding in the area of an exposed section of pipeline. (Trans Mountain)

Compounding costs

In an interview with the Beacon, Kung suggested the increased cost from the storms could even edge towards doubling the February 2020 estimate.

On top of the costs incurred by the flooding and mudslides, the revenue generated in the last three weeks was halted during the existing pipeline’s shutdown.

Currently, the pipeline is intended to be in service by the end of next year. In fact, Trans Mountain told Burnaby Beacon in September that, despite its delays, it didn’t foresee any delays to the projected in-service date of Dec 31, 2022.

But that’s appearing less and less likely, especially with the impact of the flooding.

Kung noted the federal Crown corporation was nearly silent on the issue in its December construction schedule. That document noted the effects of the flooding “are undetermined and as such are not reflected in the current schedule.”

That “basically makes that new schedule irrelevant,” Kung told Burnaby Beacon.

“I guess we’ll see over time, hopefully in the coming months, exactly how much delay there is, but I’m pretty confident in saying that it’s … going to cost, potentially billions of dollars,” Kung said.

“And for that reason, what we’re saying is this is an appropriate time for the federal government to have a hard look at this project, to require the Crown corporation, the public institution, to actually provide an update to the Canadian public about what the impacts are.”

Coquihalla summit delays

The WCEL report found 70 instances in which Trans Mountain requested the CER to grant it relief from among the 157 legally binding conditions of its approval. Only one of those, Kung said, was denied.

Kung noted a May 2020 affidavit, attached to one of those relief requests, by Trans Mountain Expansion Project vice-president David Safari, which stated that not completing the Coquihalla summit section of the pipeline by the end of this year “would delay the in-service date by up to 11 months and result in incremental construction costs of approximately $50-60 million.”

That’s because, according to the affidavit, failing to complete the construction by the end of this year would push work back to next year’s construction season, which will be in summer/fall of 2022.

That would mean hydrotesting and valve installation in spring and summer of 2023 and pipeline commissioning in fall 2023.

In a written statement to Burnaby Beacon, Trans Mountain said weather conditions typically impact the kind of work that can be done at the Coquihalla summit in a normal year.

“Continuing to push through as if nothing has changed, or nothing is happening, with the expansion, in particular, is insanity. ... That just seems completely wrong to me.”

Photo: City of Abbotsford

The City of Abbotsford underwater last month.

Photo: City of Abbotsford

Costs from floods are ‘significant’

The Crown corporation said it is still assessing the impacts of the flooding on TMX, with workers assessing the high-impact areas. Specifically, that means assessing the pipeline in the Fraser Valley.

“The costs related to the recent storms, flooding and subsequent shutdown of the Trans Mountain pipeline and our required response are significant,” Trans Mountain said.

“We are continuing to assess the impacts and it will be some time before we have a clear and definitive picture of the full costs associated with this event and the extent to which they will be covered by insurance.”

As for the nearly $10-billion price tag on the construction as of September, Trans Mountain said part of the costs “reflects a decision from early in project execution to pre-acquire materials before those were needed in construction and to stockpile those materials.”

“These materials are now being deployed in the construction process,” the company said.

Time to reconsider Trans Mountain?

Still, with such a major disruption to the pipeline construction, Kung said now is “as good a time as any” to reconsider the project. He said it’s not lost on him that the flooding and landslide events are a direct result of climate change, which itself is a direct result of fossil fuels, such as Trans Mountain.

“Continuing to push through as if nothing has changed, or nothing is happening, with the expansion, in particular, is insanity,” Kung said. “That just seems completely wrong to me.”

He said the government shouldn’t be dissuaded from stopping the pipeline because of money already spent on the project, noting the “sunk cost” argument is considered a fallacy in economics.

“It’s not like that money is going to make anything up, recover it. There was already a huge amount of doubt about the economic viability of the project. This is why Kinder Morgan, themselves, made the decision to walk away back in 2018,” Kung said.

“The likelihood that this becomes a stranded asset … is very high. And whether it’s the Canadian public holding the bag or an Indigenous consortium, as has been speculated in the media, neither of those are good scenarios in my mind.”

—with additional reporting from Srushti Gangdev

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Dustin Godfrey

Reporter at Burnaby Beacon

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