An eye-popping 70 per cent increase in the projected price tag for the Trans Mountain expansion was met Friday by jeers from environmental groups and a pledge from the federal government to put no additional public money toward the project.
But Canada’s oil and gas industry remains staunchly behind a project it says remains essential to the national interest, in spite of newly disclosed budget overruns that peg the new cost of the Trans Mountain expansion at $21.4 billion, up from an earlier estimate of $12.6 billion.
“We remain fully supportive of this world-class infrastructure project which is vital to Canada’s long-term economic success and energy security,” said Suncor Energy Inc. chief executive Mark Little, in a statement released just hours after federal Crown corporation Trans Mountain Corp. released its new cost projections for the project.
“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,” said Alex Pourbaix, CEO of Cenovus Energy Inc., in a separate statement.
The 1,150 km Trans Mountain pipeline carries 300,000 barrels of oil per day, and is Canada’s only pipeline system transporting oil from Alberta to the West Coast.
Its expansion, for which construction is currently underway, will essentially twin the existing pipeline, raising daily output to 890,000 barrels to support Canadian crude oil production growth and ensure access to global energy markets.
Trans Mountain was bought by the federal government for $4.5 billion in 2018, after previous owner Kinder Morgan Canada Inc. threatened to scrap the pipeline’s planned expansion project in the face of environmentalist opposition.
2:09 B.C.’s fight for fuel: Trans Mountain hopes to restart pipeline at reduced capacity in days
On Friday, Trans Mountain Corp. blamed the surging cost projections for the project on the COVID-19 pandemic and the effects of the November 2021 flooding in British Columbia, as well as project enhancements, increased security costs, route changes to avoid culturally and environmentally sensitive areas, and scheduling pressures related to permitting processes and construction challenges in difficult terrain.
The company also pushed back the projected completion date to the third quarter of 2023. The pipeline expansion was originally expected to be complete sometime this year.
Following the company’s update, Deputy Prime Minister Chrystia Freeland said that Trans Mountain Corp. will need to secure third-party funding to complete the project, either through banks or public debt markets.
“I want to assure Canadians there will be no additional public funding for TMC,” Freeland told reporters in Ottawa, adding the government has engaged BMO Capital Markets and TD Securities to provide financial advice on the project and has been assured by both parties that the project remains commercially viable.
Freeland said the federal government still believes the Trans Mountain expansion is a “serious and necessary project.”
“This project is in the national interest and will make Canada and the Canadian economy more sovereign and more resilient,” she said.
Oil and gas industry representatives were quick to defend Trans Mountain on Friday, arguing the project’s operators have been hit by a whammy of misfortune they could not have predicted — everything from supply chain and inflation issues triggered by COVID-19 to weather-related catastrophes like wildfires and flooding.
“It’s very easy to just look at the numbers and look at the figures, but you have to actually put it in context,” said Tristan Goodman, president of the Explorers and Producers Association of Canada. “Overall, we’re actually still very confident that this is moving in the right direction.”
1:22 B.C. floods: Shutdown of TMX pipeline could impact gas supplies
B.C. floods: Shutdown of TMX pipeline could impact gas supplies – Nov 18, 2021
But environmentalists were quick to use words like “white elephant” and “boondoggle.” Keith Stewart of Greenpeace Canada pointed out that this is not the first time the budget for the Trans Mountain expansion has ballooned — back in 2015, Kinder Morgan estimated the project would cost $5.4 billion, and that rose to $7.4 billion in 2017 just before the Trudeau government bought it.
“This project was crazy from a climate perspective when it was supposed to cost $7.4 billion, but at $21.4 billion and rising it is now economic madness,” Stewart said.
Sven Biggs, Canadian oil and gas program director for Stand.earth, said the Trans Mountain pipeline expansion is a threat to the climate and the federal government should cancel it.
“Ironically, the latest delays (to project construction) were caused in large part by the recent flooding in B.C., which has been linked to climate change,” Biggs said in an emailed statement.
Spiraling construction costs mean more borrowing and higher interest costs, which will make the pipeline less profitable to an eventual buyer, said Richard Masson, executive fellow with the University of Calgary’s School of Public Policy.
That’s a problem, Masson said, because the federal government has indicated it does not want to be the long-term owner of the pipeline. On Friday, Freeland said the government will launch a divestment process later this year.
A number of Indigenous-led initiatives have already come forward saying they will seek an equity stake in the project.
Masson added that while Canada’s energy industry can get by without the added pipeline capacity for now, thanks to the addition of Enbridge Inc.’s Line 3 replacement project that came online last fall, the Trans Mountain expansion is still sorely needed in the long-term.
1:24 TransMountain pipeline opponents set up rail blockade in Vancouver
TransMountain pipeline opponents set up rail blockade in Vancouver – Sep 21, 2020
The newly announced budget overruns and cost increases, he said, are just the latest example of how difficult it is to complete major infrastructure projects in this country.
“Canada’s got a lot of resources, the world needs our resources, but we’re just having so much trouble actually developing them in a cost-effective way,” Masson said.
Also on Friday, Trans Mountain Corp. announced the retirement of president and CEO Ian Anderson, effective April 1.
“Ian led a project that continues to progress while setting new standards for major pipeline project execution, including unprecedented levels of involvement from Indigenous Peoples and communities,” board chair William Downe said in a news release.
Anderson, who has been with Trans Mountain and its predecessor companies for 40 years, was previously president of Kinder Morgan Canada.
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.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
