Steel pipe to be used in the oil pipeline construction of the Canadian government’s Trans Mountain Expansion Project lies at a stockpile site in Kamloops, B.C., on June 18, 2019.Dennis Owen/Reuters
The federal government says no more public funds will be spent on the Trans Mountain pipeline expansion, after the Crown corporation building the project announced Friday that the cost has ballooned to $21.4-billion and the expansion now won’t be complete until late 2023.
That’s close to a 70-per-cent jump over the initial $12.6-billion price tag, and almost a year later than the original December, 2022, start date targeted by Trans Mountain Corp.
Finance Minister Chrystia Freeland told media Friday that instead of public cash, Trans Mountain will secure the funding necessary to complete the project with third-party financing, either in public debt markets or from financial institutions.
Ms. Freeland said financial advice from BMO Capital Markets and TD Securities confirmed that “public financing for the project is a feasible option that can be implemented promptly.” And despite the increased cost estimate and longer completion timeline, she said the project remains commercially viable.
Trans Mountain referred questions about how it will secure financing to Ms. Freeland’s office. Her office provided no details on how confident the minister is that the project will be able to nail down funds, but said prospective purchasers still have a strong interest in operational infrastructure assets such as the pipeline expansion.
Financial institutions are growing increasingly wary of financing oil projects, as they face pressure to put more emphasis on environmental, social and governance (ESG) measures and make greener investment decisions.
Less than a year ago, Trans Mountain successfully lobbied the federal energy regulator to let it keep the name of its insurer secret, arguing that public pressure on insurance companies over environmental concerns in the oil sector has already made it harder and more expensive to insure the pipeline expansion.
The expansion’s financing costs alone have already increased by about $1.7-billion, Trans Mountain said Friday. The corporation attributed that to higher construction costs, the extended end date and interest payments.
Trans Mountain said another $2.3-billion of the cost jump comes from what it called “project enhancements,” such as more benefit agreements with Indigenous communities, the installation of advanced leak detection systems and new, unplanned route changes that avoid culturally and environmentally sensitive areas.
Wildfires, extreme heat, flooding and landslides that pummelled British Columbia in 2021 and COVID-19 measures added $1.7-billion to the price tag, while schedule pressures such as securing permits and the “significant construction challenges in both marine and difficult terrain” that have pushed the completion date into late 2023 account for another $2.6-billion.
The expansion project will nearly triple the capacity of the existing pipeline, which runs from Strathcona County, near Edmonton, to Burnaby, B.C. The vast majority of the project, which is about half complete, uses the existing pipeline route.
Prime Minister Justin Trudeau’s government bought the pipeline and expansion project from Kinder Morgan Inc. for $4.5-billion in 2018 amid legal hurdles and opposition from Indigenous communities, environmentalists and the B.C. government. The Federal Court of Appeal overturned the pipeline project’s approval, ruling Ottawa had failed to adequately consult First Nations. That led to a new round of consultations, and the federal cabinet approved the expansion for the second time in 2019.
However, the federal government has never intended to be the final owner-operator of the expanded pipeline, and Ms. Freeland reiterated that position Friday.
While buying the pipeline and the expansion was “a serious and necessary investment” to ensure Canada receives fair market value for its oil and gas, she said, Ottawa intends to launch a divestment process in the coming months.
“Our government has also been working with Indigenous communities on further economic participation in Trans Mountain for more than two years, and we will announce the next step towards that important objective later this year,” she said.
Eugene Kung of West Coast Environmental Law, an environmental law and public advocacy group, said in a statement Friday that the skyrocketing cost of the expansion and the delay demonstrate that Trans Mountain’s “already-collapsed business case is worse than ever, and the cost will probably increase further.”
“It is outrageous that [the Trans Mountain expansion’s] cost has nearly doubled in two years with very little oversight. Especially since the so-called economic benefits were used to justify the infringement of Indigenous rights, the significant climate impacts of building oil and gas expansion infrastructure, and the devastating effects on wildlife like salmons and orcas,” he said.
“It’s time to admit that [the project] is a bad idea and to cut our losses by cancelling this white elephant before it becomes a stranded asset.”
Oil companies, however, remain supportive of the pipeline expansion.
Cenovus Energy Inc. president and CEO Alex Pourbaix said he believes the business case for the project remains sound, and looks forward to it coming online.
“While no one wants to see cost increases, they are often a fact of life with projects of this size, and in this case were largely beyond Trans Mountain’s control,” he said in an e-mail.
“Getting this pipeline built will provide a significant boost to the Canadian economy while helping to solidify investor confidence in our oil and gas industry.”
Suncor Energy Inc. president and CEO Mark Little said in an e-mail that while he was disappointed with Friday’s news, the pipeline remains “vital to Canada’s long-term economic success and energy security.”
Trans Mountain president and CEO Ian Anderson will retire April 1. On Friday, he said progress on the pipeline expansion over the past two years has been “remarkable when you consider the unforeseen challenges we have faced including the global pandemic, wildfires and flooding.”
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TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
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