Trans Mountain paid McKinsey over $32M to save money as pipeline costs exploded
Canadian taxpayers could pay up to $18.8 billion for the pipeline expansion, even though federal...
Update: Read our detailed explainer on the pipeline’s history, the current issues it faces and why you should care about it.
Since the 1950s the 1,150-kilometre Trans Mountain pipeline system has transported both crude oil and refined petroleum products from Edmonton, Alberta, to refineries and export terminals on the B.C. and Washington State coasts.
In 2013, Texas-based Kinder Morgan applied to expand the pipeline system from a capacity of 300,000 barrels per day to 890,000 barrels per day.
In 2018, the Canadian federal government purchased both the pipeline and its expansion project for $4.5 billion. Trans Mountain became a subsidiary of a Crown corporation, benefiting from state-backed financing and loan guarantees.
The pipeline’s expansion project faced years of legal battles, construction delays and cost overruns, but on May 1, 2024 it began commercial operations.
The Trans Mountain expansion included twinning the current pipeline, constructing 12 new pump stations, 19 new storage tanks and three new marine berths located at the Westridge Marine Terminal in the Burrard Inlet near Vancouver.
Kinder Morgan originally projected it would cost $5.4 billion and be “operational in late 2017.” Over the years the price tag steadily increased, and by 2024 the cost had been pegged at $34 billion.
In an August 2023 letter to the regulator, Trans Mountain cited regulatory approvals and consultations with First Nations as two major issues that contributed to delays and cost overruns.
It also encountered a labour shortage, ran into a previously unidentified landfill during construction, and faced wildfires, flooding, a pandemic and a death and injury on the worksite that resulted in shutdowns or that reduced operations.
The expansion project effectively tripled the pipeline’s capacity. Much of the pipeline’s oil is destined for Westridge Marine Terminal in Burnaby, where it will be loaded onto oil tankers that will navigate past Vancouver, the Gulf Islands and through the Juan de Fuca Strait before reaching open ocean.
The expansion will mean a seven-fold increase in oil tanker traffic from the Westridge terminal, from around 60 oil tankers to more than 400 per year.
The pipeline was reviewed by the Canada Energy Regulator, then known as the National Energy Board. During the review process, Canada’s Department of Fisheries and Oceans argued Kinder Morgan’s assessment of threats to whale species off the B.C. coast from increased tanker traffic contained “insufficient information and analysis.”
A separate analysis, commissioned by the Raincoast Conservation Foundation, found the anticipated increase in tanker traffic gives the local Southern Resident Killer Whale population only a 50 per cent chance of survival. Southern resident killer whales, which use echolocation to hunt their prey, have been overwhelmed by noise pollution in their habitat, a problem that has recently been connected to starvation.
In addition to concerns about an increase in oil tanker traffic, many criticized the regulator’s review for its elimination of oral cross-examination, exclusion of upstream climate change considerations and failure to adequately consult affected First Nations along the pipeline route.
The board also did not compel Kinder Morgan to answer questions regarding the company’s oil spill response capacity.
Several high-profile intervenors publicly withdrew from the review of the project, saying the process was biased. Former energy executive Marc Eliesen dropped out of the process in late 2014, calling it “fraudulent” and an “act of deception.
A lack of faith in the pipeline review process was noted by Prime Minister Justin Trudeau in 2015 during his federal election campaign. Trudeau committed to overhauling the regulator and the review process of major pipeline proposals. On the campaign trail, Trudeau publicly confirmed the overhaul would apply to existing pipeline project proposals, including Trans Mountain. After Trudeau took office, the Trans Mountain pipeline review was not restarted under new rules. Instead the federal government assigned a ministerial panel to conduct public hearings regarding the project.
In November 2016, the ministerial panel released a report on the project, the “Report from the Ministerial Panel for the Trans Mountain Pipeline Expansion Project,” which recommended against the project proceeding without a serious reassessment of its impacts on climate change commitments, indigenous rights and marine mammal safety.
On November 29, 2016, the federal government approved the project subject to 157 conditions.
The following year a coalition between the British Columbia NDP and Greens won power in the province and the new premier, John Horgan, vowed to use “every tool in our toolbox” to stop the expansion project.
The Tsleil-Waututh First Nation also launched a legal challenge against the Canadian government and the regulator over legal compliance and consultation with First Nations in relation to the proposed pipeline expansion.
In addition, the Stk’emlúpsemc te Secwépemc Nation, who have a “historical, cultural and spiritual connection” to the lands the pipeline is built on, believe Secwépemc law was violated by the way Trans Mountain approached construction of the new pipeline.
A few months after the government bought the pipeline, the Federal Court of Appeal quashed the expansion project’s approval, saying Canada failed to meaningfully consult with First Nations.
The ruling also found the regulator’s report had ignored the increased oil tanker traffic that would result from the pipeline’s construction.
But the pipeline received a series of high-profile legal victories after that. The national energy regulator considered the project again, and recommended again in early 2019 that the project be approved.
Trudeau signed off on it for a second time in June 2019. A second Federal Court of Appeal ruling in 2020 found this second approval was reasonable under the law.
In July 2020 the Supreme Court dismissed an application from Tsleil-Waututh Nation, as well as Squamish Nation and Coldwater Indian Band, that attempted to overturn the second Federal Court of Appeal ruling.
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