A Texas-based energy company has conceded that it might have lowballed the cost of a massive pipeline project.
Today, Kinder Morgan announced that its Trans Mountain project will cost $7.4 billion.
That's $2 billion higher than its initial forecast of $5.4 billion four years ago. In 2015, the estimate rose to $6.8 billion.
In a news release, Kinder Morgan attributed the higher cost to the National Energy Board's 157 conditions for approval.
The company also cited "project changes as a result of public feedback such as thicker pipe wall, additional drilled crossings in environmentally sensitive areas and the Burnaby Mountain tunnel".
“It’s been a lengthy and rigorous process and in spite of the many changes in the markets over the five years since our customers signed on, we knew commercial support for this project remained strong,” Kinder Morgan president Ian Anderson said.
The company claimed that 13 shippers have made 15- to 20-year commitments to move 708,000 barrels per day through the pipeline, which runs from Alberta's oilsands to Burnaby. The pipeline's capacity will be 890,000 barrels per day, nearly triple the amount going throught its existing pipeline to Burnaby.
Last year, the Trudeau government gave a green light to the expansion project.
The rising cost, however, has caused one environmental group, Stand.earth, to suggest that the fate of the pipeline is "questionable".
“Kinder Morgan borrowed heavily to finance a series of major acquisitions just before the downturn in global energy prices, the combination of these two factors has left the company with high debt to equity ratio which has in turn hurt their bond rating, making it difficult for them to find financing for new projects like Trans Mountain” the organization's energy and climate campaigner, Sven Biggs, said in a news release.
Meanwhile, another critic of the pipeline project, the Dogwood Initiative's Kai Nagata, has claimed that the B.C. government's approval of the pipeline has been "tainted by political donations".
Elections B.C. recently launched a probe into political donations by lobbyists in their own names but made on behalf of clients.
Nagata said in a news release that the public deserves to to know if Kinder Morgan's representatives were engaged in these practices.
Election B.C. has already stated that indirect political donations are illegal under the Election Act.
“What this means is if Kinder Morgan reimbursed any of its staff or lobbyists for event tickets, tables at fundraisers or other political contributions, they broke the law,” Nagata declared.
None of the allegations involving B.C. lobbyists have been proven in court.
Two other nonprofit groups, Democracy Watch and Pipe Up Network, filed a legal challenge in January against the B.C. government's approval. The petitioners claimed that the premier should have stepped aside from the decision because she was collecting a salary from the B.C. Liberal party that was financed by donations—including a significant amount from companies with a financial interest in the pipeline project.
Kinder Morgan's proposed pipeline has generated tremendous opposition in Vancouver. Part of the reason is that once it's completed, approximately 400 oil tankers per year will pass through Burrard Inlet.