In her budget speech to the House of Commons on Tuesday, Finance Minister Chrystia Freeland took a moment to celebrate the finishing touch on expansion of the Trans Mountain oil pipeline.
The controversial project has been plagued by delays and massive cost overruns, but Freeland instead focused on its completion, highlighting the: “talented tradespeople and the brilliant engineers who, last Thursday, made the final weld, known as the golden weld, on a great national project.”
For all the difficulties with developing and building TMX, Freeland still faces another major hurdle that is sure to prove contentious — choosing when to sell it, who gets to buy it, and for how much.
An upcoming election and more than $34 billion in construction costs are raising the stakes.
Ottawa bought the project when it was on the verge of falling apart — before there was ever a shovel in the ground — in the face of legal, political and regulatory challenges.
The federal government has long vowed to sell the project (including at least a partial ownership stake to Indigenous groups) once construction was complete. That milestone has now been reached.
Minister of Finance Chrystia Freeland cheered the final ‘golden’ weld of the pipeline expansion during her budget speech in Tuesday. (Justin Tang/The Canadian Press)
But the move will no doubt open a Pandora’s box, says Daniel Béland, the director of the McGill University Institute for the Study of Canada and a professor in the department of political science.
He says any potential deal will face intense scrutiny considering the election is due before the fall of 2025 and, most notably, because the actual sale price is expected to be far lower than the cost to actually build the pipeline.
“They were in a hot spot when they bought it back in 2018. They are still in a hot spot,” said Béland.
How the governing Liberals handle Trans Mountain could impact how voters view the Liberal party’s handling of financial, economic, Indigenous, and environmental issues.
“There’s risk either way. If you sell it really fast, but you sell it at the price that is considered to be quite low, then you might be accused of just getting rid of it for political reasons but not having the interest of taxpayers in mind,” he said.
“But, if you wait and you don’t sell it, then you might be accused of being basically permanently involved or trying to be permanently involved in that sector of the economy in a way that many people, even people who are more conservative, may find inappropriate.”
A totem pole is seen outside the gate of the Trans Mountain tank farm in Burnaby, B.C. The government has vowed to sell at least a partial stake in the project to Indigenous groups. (Josh McLean/CBC)
Deep discount
There has always been interest in buying it, including from Stephen Mason, the managing director of Project Reconciliation, a Calgary-based organization which aims to use a potential ownership stake to benefit Indigenous communities.
Nearly five years ago, Mason walked into then-federal finance minister Bill Morneau’s office in Ottawa and made an offer to purchase Trans Mountain before construction had even begun on its expansion, which will transport more oil from Alberta to the British Columbia coast.
Morneau was interested, he says, but the project wasn’t for sale until the new pipeline was built.
Much has changed since that meeting in July 2019, including the ballooning cost of Trans Mountain to more than $34 billion (compared to an original estimate of about $7.3 billion) and numerous delays in construction.
Mason is still pursuing ownership. He won’t discuss numbers, but suspects Trans Mountain is worth far less than $34 billion.
“My intuition is telling me that it’s going to be a fairly significant writedown,” he said. “I’m not sure the Liberal government wants to get into a public recognition of what the writedown is ahead of the election, but that is just … my speculation.”
Energy researcher Rory Johnson says ‘there’s no way’ tolls on the pipeline can be high enough to recover its construction cost. (Google Meets)
New tolls
A critical factor in the timing and price of a potential sale is a dispute over how much oil companies will have to pay to actually use the new pipeline.
Several large oil producers signed long-term contracts to use 80 per cent of the pipeline. However, as construction costs have soared, so too have the tolls that companies will have to pay.
Those companies have balked at the higher rates arguing they shouldn’t have to bear the “extreme magnitude” of construction overruns. The Canada Energy Regulator has scheduled a hearing for September, at the earliest, to resolve the issue.
For now, the regulator has set an interim toll of $11.46 for every barrel of oil moved down the line. That price includes a fixed amount of $10.88 and a variable portion of $0.58. The fixed amount is nearly double what Trans Mountain estimated it would be in 2017.
“There’s no way that you can have tolls high enough on TMX to cover a $34 billion budget,” said Rory Johnston, an energy researcher and founder of the Commodity Context newsletter, who describes the cost overruns on the project compared to the original estimates as “gigantic.”
WATCH | The climbing costs of TMX:
A post-construction review of costs should be done on TMX
28 days ago
Duration 3:28
Lessons could be learned on how the Trans Mountain expansion pipeline was developed and built, says company CFO Mark Maki.
He doesn’t expect the final tolls to be much higher than the interim amount because, otherwise, the pipeline could become too expensive for oil companies to want to use. Based on the interim tolls, Johnston expects the federal government to likely only recover about half of the money it spent to buy and build Trans Mountain.
“There’s no way anyone would pay the full cost of the pipeline because the tolls don’t support it. You’re going to need to discount it. You’re going to need to take a haircut of at least 50 per cent of this pipeline,” he said.
The federal government currently owns the original Trans Mountain pipeline, built in 1953, the now-completed expansion and related facilities including storage tanks and an export terminal.
Construction crews work on the Trans Mountain expansion near Blue River, B.C. in April. (Josh McLean/CBC)
Potential buyers
The federal government has looked at offering an equity stake to the more than 120 Western Canadian Indigenous communities whose lands are located along the pipeline route, while finding a different buyer to be the majority owner.
Besides Project Reconciliation, other potential buyers include a partnership between the Western Indigenous Pipeline Group (WIPG) and Pembina Pipelines.
The group has the support from about 40 Indigenous communities and hopes to purchase the project within the next year, said Michael Lebourdais, an WIPG director and chief of Whispering Pines/Clinton Indian Band, located near Kamloops, B.C.
Those communities have to live with the environmental risk of a spill, so they should benefit financially from the pipeline, he says.
Pension funds and other institutions could pursue ownership too.
“There will be buyers. I’m not sure that they’ll be willing to pay the full cost of construction but I think there’ll be buyers for sure,” said Jackie Forrest, executive director of the ARC Energy Research Institute.
The federal government will likely highlight the overall economic benefits of the new pipeline and the expected role of Indigenous communities in ownership, experts say, as a way to defend against criticism if the eventual sale price is low.
In her Tuesday speech, Freeland was already promoting the pipeline’s expected financial boost by highlighting the Bank of Canada’s recent estimate that the new Trans Mountain expansion will add one-quarter of a percentage point to Canada’s GDP in the second quarter.
MONTREAL – The employers association at the Port of Montreal has issued the dockworkers’ union a “final, comprehensive offer,” threatening to lock out workers at 9 p.m. Sunday if a deal isn’t reached.
The Maritime Employers Association says its new offer includes a three per cent salary increase per year for four years and a 3.5 per cent increase for the two subsequent years. It says the offer would bring the total average compensation package of a longshore worker at the Port of Montreal to more than $200,000 per year at the end of the contract.
“The MEA agrees to this significant compensation increase in view of the availability required from its employees,” it wrote Thursday evening in a news release.
The association added that it is asking longshore workers to provide at least one hour’s notice when they will be absent from a shift — instead of one minute — to help reduce management issues “which have a major effect on daily operations.”
Syndicat des débardeurs du port de Montréal, which represents nearly 1,200 longshore workers, launched a partial unlimited strike on Oct. 31, which has paralyzed two terminals that represent 40 per cent of the port’s total container handling capacity.
A complete strike on overtime, affecting the whole port, began on Oct. 10.
The union has said it will accept the same increases that were granted to its counterparts in Halifax or Vancouver — 20 per cent over four years. It is also concerned with scheduling and work-life balance. Workers have been without a collective agreement since Dec. 31, 2023.
Only essential services and activities unrelated to longshoring will continue at the port after 9 p.m. Sunday in the event of a lockout, the employer said.
The ongoing dispute has had major impacts at Canada’s second-biggest port, which moves some $400 million in goods every day.
On Thursday, Montreal port authority CEO Julie Gascon reiterated her call for federal intervention to end the dispute, which has left all container handling capacity at international terminals at “a standstill.”
“I believe that the best agreements are negotiated at the table,” she said in a news release. “But let’s face it, there are no negotiations, and the government must act by offering both sides a path to true industrial peace.”
Federal Labour Minister Steven MacKinnon issued a statement Thursday, prior to the lockout notice, in which he criticized the slow pace of talks at the ports in Montreal and British Columbia, where more than 700 unionized port workers have been locked out since Nov. 4.
“Both sets of talks are progressing at an insufficient pace, indicating a concerning absence of urgency from the parties involved,” he wrote on the X social media platform.
This report by The Canadian Press was first published Nov. 8, 2024.
HALIFAX – Nova Scotia Premier Tim Houston says it’s “disgraceful and demeaning” that a Halifax-area school would request that service members not wear military uniforms to its Remembrance Day ceremony.
Houston’s comments were part of a chorus of criticism levelled at the school — Sackville Heights Elementary — whose administration decided to back away from the plan after the outcry.
A November newsletter from the school in Middle Sackville, N.S., invited Armed Forces members to attend its ceremony but asked that all attendees arrive in civilian attire to “maintain a welcoming environment for all.”
Houston, who is currently running for re-election, accused the school’s leaders of “disgracing themselves while demeaning the people who protect our country” in a post on the social media platform X Thursday night.
“If the people behind this decision had a shred of the courage that our veterans have, this cowardly and insulting idea would have been rejected immediately,” Houston’s post read. There were also several calls for resignations within the school’s administration attached to Houston’s post.
In an email to families Thursday night, the school’s principal, Rachael Webster, apologized and welcomed military family members to attend “in the attire that makes them most comfortable.”
“I recognize this request has caused harm and I am deeply sorry,” Webster’s email read, adding later that the school has the “utmost respect for what the uniform represents.”
Webster said the initial request was out of concern for some students who come from countries experiencing conflict and who she said expressed discomfort with images of war, including military uniforms.
Her email said any students who have concerns about seeing Armed Forces members in uniform can be accommodated in a way that makes them feel safe, but she provided no further details in the message.
Webster did not immediately respond to a request for comment.
At a news conference Friday, Houston said he’s glad the initial request was reversed but said he is still concerned.
“I can’t actually fathom how a decision like that was made,” Houston told reporters Friday, adding that he grew up moving between military bases around the country while his father was in the Armed Forces.
“My story of growing up in a military family is not unique in our province. The tradition of service is something so many of us share,” he said.
“Saying ‘lest we forget’ is a solemn promise to the fallen. It’s our commitment to those that continue to serve and our commitment that we will pass on our respects to the next generation.”
Liberal Leader Zach Churchill also said he’s happy with the school’s decision to allow uniformed Armed Forces members to attend the ceremony, but he said he didn’t think it was fair to question the intentions of those behind the original decision.
“We need to have them (uniforms) on display at Remembrance Day,” he said. “Not only are we celebrating (veterans) … we’re also commemorating our dead who gave the greatest sacrifice for our country and for the freedoms we have.”
NDP Leader Claudia Chender said that while Remembrance Day is an important occasion to honour veterans and current service members’ sacrifices, she said she hopes Houston wasn’t taking advantage of the decision to “play politics with this solemn occasion for his own political gain.”
“I hope Tim Houston reached out to the principal of the school before making a public statement,” she said in a statement.
This report by The Canadian Press was first published Nov. 8, 2024.
VANCOUVER – Employers and the union representing supervisors embroiled in a labour dispute that triggered a lockout at British Columbia’s ports will attempt to reach a deal when talks restart this weekend.
A spokesman from the office of federal Labour Minister Steven MacKinnon has confirmed the minister spoke with leaders at both the BC Maritime Employers Association and International Longshore and Warehouse Union Local 514, but did not invoke any section of the Canadian Labour Code that would force them back to talks.
A statement from the ministry says MacKinnon instead “asked them to return to the negotiation table,” and talks are now scheduled to start on Saturday with the help of federal mediators.
A meeting notice obtained by The Canadian Press shows talks beginning in Vancouver at 5 p.m. and extendable into Sunday and Monday, if necessary.
The lockout at B.C. ports by employers began on Monday after what their association describes as “strike activity” from the union. The result was a paralysis of container cargo traffic at terminals across Canada’s west coast.
In the meantime, the union says it has filed a complaint against the employers for allegedly bargaining in bad faith, a charge that employers call a “meritless claim.”
The two sides have been without a deal since March 2023, and the employers say its final offer presented last week in the last round of talks remains on the table.
The proposed agreement includes a 19.2 per cent wage increase over a four-year term along with an average lump sum payment of $21,000 per qualified worker.
The union has said one of its key concerns is the advent of port automation in cargo operations, and workers want assurances on staffing levels regardless of what technology is being used at the port.
The disruption is happening while two container terminals are shut down in Montreal in a separate labour dispute.
It leaves container cargo traffic disrupted at Canada’s two biggest ports, Vancouver and Montreal, both operating as major Canadian trade gateways on the Pacific and Atlantic oceans.
This is one of several work disruptions at the Port of Vancouver, where a 13-day strike stopped cargo last year, while labour strife in the rail and grain-handling sectors led to further disruptions earlier this year.
This report by The Canadian Press was first published Nov. 8, 2024.
