Saturday, February 08, 2020

It's Up, Up and Away for Trudeau's Folly

It's no wonder the private sector wants nothing to do with "Trudeau's Folly," a.k.a. the Trans-Mountain pipeline.

When Kinder-Morgan dangled the hook there was only one sucker willing to bite - our federal government.  And Trudeau and Morneau took that hook real deep; hook, line and sinker deep.

Those Texas boys, En-Ron alumni, knew how to play the rubes.

There was a reason Kinder-Morgan was going to walk away from Trans-Mountain. They knew how much it would cost to expand that pipeline and they knew it just wasn't viable. Then along came these Ottawa marks with their chequebook, allowing the Texans to score a handsome profit.

The feds have tried to flog the damned thing but the private sector wants nothing to do with Trudeau's Folly. They can see the writing on the wall for high-carbon, low-value fossil fuels. They know the markets are becoming very leery of resources that could overnight turn into "stranded assets." There's a glut of good oil. Why sink tens of billions of dollars that you may never recover into garbage oil?

Colin Powell is credited with formulating the Powell Doctrine that says don't get into something without first knowing how you'll get back out.

Now it's coming out that the budget forecasts for building Trudeau's Folly were about as reliable as Trudeau's judgment in buying the pipeline.
The cost to build the Trans Mountain pipeline expansion has jumped by 70 per cent to $12.6 billion from a three-year-old estimate of $7.4 billion. 
President and CEO Ian Anderson says the company owned by the federal government has spent $2.5 billion to date, including the impact of delays and additional regulatory processes, leaving an additional $8.4 billion needed to complete the project, plus $1.7 billion of financial carrying costs. 
He says the project is now expected to be in service by December 2022. 
The estimate of $7.4 billion was made in 2017 by the previous owner, Houston-based Kinder Morgan, Inc., which sold the expansion project and the existing pipeline to the federal government in 2018 for $4.5 billion.
This being government we probably haven't seen the last cost increase the Canadian public will have to bear from Trudeau's Folly.


the salamander said...

.. All this for a project that's expenses are higher than its revenues.. and operating at a loss is now expected for the entire life - 40 some years - of the project. This despite a constant infusion of taxpayer subsidies. In another post & comment I linked financial analysis which also established how Trans Mountain Corporation purchase funds were taken from another Canadian Development account, as will construction costs. That being an account holding Hibernia offshore oil and gas assets and income - Newfoundland and Labrador. I assume it was Scott Brison, now spending more time with his family after bolting as President of Canada's Government Treasury Board under Trudeau, who cut the cheque. Brison didn't go straight home, instead ending up in less than 24 hours later, accepting a senior position re Bank of Montreal supervising the portfolio with Lavalin SNC .. uh.. ie any major Canadian Energy Infrastructure, both construction and management..

What coincidence eh ! Meanwhile he got no heat, knows everything and just quit, was never questioned, ever, yet it was Ms Wilson-Raybould and Ms Joan Philpott who been absolutely vilified, insulted by half wit partisan and know nothings. Their problem was having any principles.. and even worse they had tons

The Disaffected Lib said...

2015. We thought everything would change, eh Sal? Not so much.

Hugh said...

"The construction cost is in addition to the more than $4 billion the federal government spent to purchase the existing pipeline and the expansion plans, and another $600 million Ottawa set aside for contingencies (called a reserve fund for "cost impacts"). Those sums bring the total cost of taxpayers' investment in Trans Mountain to more than $16 billion."

The Disaffected Lib said...

And those costs are just getting started, Hugh. Look at what happens when we build a knock-off of a Norwegian patrol ship.

John's Aghast said...

Meanwhile, I've turned my thermostat down to 18 degrees and restricted my shopping trips to bi-weekly in order to help transition from fossil fuel use!
SIXTEEN BILLION for a stranded asset!!! Can't hold a candle to the Site C folly!
And don't get me off on the Wet'suwet'en fiasco. The Natives may be trying to establish their property rights, but in doing so are saving Coastal GasLink a heap of trouble (which transfers to the taxpayer, as all oil and gas plays do when they land in trouble.)