A $100 Million Nest and Other Absurdities

Much has been said about the twinning of the Trans-Mountain Pipeline that carries oil from Edmonton to Burnaby. The project was bought by the federal government after Texas-based Kinder Morgan gave up after appeals, delays and politics made completing the expansion nearly impossible.
The FBI bought the assets for $4.5 billion thinking it would cost about $3 billion more to complete. In June, however, the federal government’s budget watchdog said the project is no longer viable as costs have risen to $21.4 billion.
Heather Exner-Pirot, a senior fellow at the Macdonald-Laurier Institute, had a comment on why the cost of the project has risen…
How has the cost of TMX tripled since then? Covid, BC floods and wildfires were no good. But it was regulatory and allowed delays, environmental concessions, and the cost of capital, interest and labor to deal with all of those that added the lion’s share. TMX has become the poster child of Canada’s broken regulatory approval system.
It is worth highlighting some of the consequences that the construction project faced.
More than 100 anthills, 150,000 amphibians and thousands of bird nests had to be moved or protected at a cost of more than $50 million. Crossing points for snakes, snails and frogs have been established. Rare mosses have been moved. TMX is the site of the largest archaeological project in Canadian history with hundreds of archaeologists conducting tens of thousands of excavations at a cost likely in excess of $100 million.
In some locations, there are more monitors than construction workers who understandably feel monitored. The city of Burnaby, which is officially opposing the project, has postponed minor traffic and building permits.
But it’s a bird’s nest that best emphasizes the disdain for the project. In April 2021, an Anna’s hummingbird nest was found in a tree felled in TMX’s mining zone. It was reported by members of the Community Nest Finding Network who had been monitoring the site. The conservation status of the Anna’s hummingbird is of “least concern” and its breeding range has expanded in recent decades. But Environment and Climate Change Canada decided to halt construction for months, fearing other nests could be damaged in the same way. It is difficult to estimate the exact cost of this closure, but credible assessments indicate it is above $100 million.
One can love migratory birds and still admit that there are more constructive ways to protect nesting habitats. But there is no problem with balancing costs and benefits when it comes to TMX. This has not gone unnoticed in the investment world. Who would want to put their money into a resource project in Canada when the timelines can double and the costs triple, even after approval?
There are those who hate pipelines so much that they feel no empathy for the impositions TMX workers have faced, or regret the billions of dollars the federal government has absorbed in overdrafts. They care little that the long-term proprietary revenue that TMX will deliver to its eventual owners, most likely an indigenous consortium, has slowed down, or that its completion would help Canada replace Russian exports to our allies in Asia. They’re not worried about the estimated $1.5 billion a year in economic losses.
But even the most ardent pipeline opponent should be concerned about TMX’s problems, as it exemplifies the Orwellian nature of the Canadian regulatory system. This not only regulates pipelines, but also transmission lines, railways, hydroelectric plants, nuclear power plants, mines, wind farms and more. We will need $2 trillion in new infrastructure over the next 30 years to meet our climate goals.
It won’t happen with the regulatory system we have today.
Strange, isn’t it, that the pipeline’s opponents are moaning about the high cost of the project and that it is now a huge money loser for the government, when in fact they are the ones largely responsible for the cost increase.
It is imperative to get our oil overseas; improving our regulatory process is even more so.

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