February 24, 2024

The Commission of the Canada Energy Regulator (CER) has approved preliminary interim tolls for the expanded Trans Mountain pipeline system.

The decision allows Trans Mountain Corporation to charge for pipeline services once expanded operations begin. The benchmark toll, set at $11.46 per barrel, applies on an interim basis, to shippers with a 15-year contract transporting under 75,000 barrels per day from Edmonton to Burnaby. Other tolls will vary by path, length of contract and volume commitment, the regulator said in a statement.

The benchmark toll consists of a fixed amount of $10.88 per barrel and a variable portion of $0.58. The fixed amount was calculated using Trans Mountain’s most recent expansion cost estimate. The variable amount was calculated using forecasted volumes shipped and costs such as power, according to the statement.

The next step in the interim tolling process is the final interim tolls hearing that will continue throughout 2024 and include a detailed cost review. As part of the final interim tolls hearing, Trans Mountain must provide additional cost information by December 15, the CER said.

In June, several oil majors in Canada objected to the rising costs and fees to transport crude on the expanded Trans Mountain pipeline, including BP Plc, Suncor Energy Inc., Canadian Natural Resources Ltd., Cenovus Energy Inc. and PetroChina, which all voiced concerns to the CER.

The Trans Mountain expansion aims to increase the system’s capacity to 890,000 barrels a day and provide a fast and relatively cheap way to sell Canadian crude into Asian markets through shipping terminals near Vancouver. However, environmental opposition and construction challenges have delayed the line and boosted its costs. The pipeline’s price tag has risen to almost C$31 billion ($24 billion), up more than fivefold since it was first proposed more than a decade ago, according to an earlier report.

Third-Quarter Net Loss

Meanwhile, Trans Mountain reported that its net income for the third quarter decreased by $638.28 million (CAD 864.6 million) to a net loss of $535.27 million (CAD 724.9 million), as compared to net income of $103.16 million (CAD 139.7 million) in the same period of the prior year. Net income for the nine-month period ended September 30, decreased by $549.6 million (CAD 744.3 million) to a net loss of $272.18 million (CAD 368.6 million), as compared to net income of $277.42 million (CAD 375.7 million) in the same period of the prior year.

The company said it booked a net loss in the third quarter due to a $655.78 million (CAD 888.1 million) goodwill impairment charge for the full carrying value of goodwill related to the August 31, 2018, acquisition of the Trans Mountain Pipeline System and Puget Pipeline. “The net loss in the three and nine-month periods ended September 30, 2023, incorporates the goodwill impairment and interest expense, partially offset by equity allowance for funds used during construction (AFUDC) and capitalized debt financing costs”, Trans Mountain said in a recent earnings release.

Trans Mountain said its results “demonstrated strong financial and operational performance as the mainline operated at full capacity during the first nine months of 2023, including a record average throughput of approximately 369,000 barrels per day during the third quarter”. The company delivered approximately 34,000 barrels per day to Westridge Marine Terminal in Burnaby, British Columbia, and 246,000 barrels per day to Washington state on the Puget Pipeline in the three-month period ending September 30.

As of September 30, the Trans Mountain expansion project was approximately 96 percent complete with less than 16 kilometers of pipe to install. Trans Mountain expects the project’s mechanical completion early in 2024, with commercial service beginning near the end of the first quarter of 2024.

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