Get the inside scoop on The Narwhal’s environment and climate reporting by signing up for our free newsletter.

The Trans Mountain fossil fuel pipeline expansion has not led to significantly lower prices at the pumps in Vancouver — but the economist who championed that theory is arguing a strict price comparison misses the bigger picture.

Kent Fellows, an assistant professor of economics at the University of Calgary, published a paper with the C.D. Howe Institute think tank this summer that argued the expansion of the government-owned Trans Mountain pipeline system meant “B.C. residents should see some gas-price relief.”

The federal government spent $34 billion twinning the pipeline, building new pump stations and upgrading a marine terminal. The result was to nearly triple the capacity of the existing system. which carries both crude oil from Alberta’s oilpatch and refined petroleum products like gasoline to refineries, oil tankers and storage hubs on the west coast.

The extra pipeline capacity, Fellows wrote in the paper, gave Vancouver easier access to cheaper fuel refined in Edmonton, considered the hub of gasoline production in western Canada, instead of having to rely on more expensive options carried by rail or imported from other countries.

The analysis made headlines, and a group that promotes Canadian oil and gas seized on it to argue that the “economic benefits” of local fossil fuel infrastructure means Canadians should support other new oil and gas projects such as pipelines and liquefied natural gas facilities.

Fellows, who is also the director of graduate programs for the university’s school of public policy, spoke to The Narwhal in late November. He acknowledged the latest data shows the average retail price of gasoline in Vancouver was not noticeably any cheaper that month than it was at the beginning of the year, before the Trans Mountain expansion went into service in May.

While retail prices in Vancouver have come down since the summer, a Narwhal review of the data shows this corresponded with the tail end of a seasonal price spike that began in March, peaked in April and stayed elevated until September, when it returned to about where it was in February.

And stripping out taxes and the margin tacked on by retailers shows the same conclusion: November’s average wholesale gasoline price for Vancouver was only a few cents off where it was in January.

Fellows, however, argued gas prices in Vancouver would hypothetically be even higher if the expanded pipeline hadn’t been built, due to inflationary pressures affecting the entire economy.

“It is a tough conversation to have with people, because you're right, the price is still high. So they're not happy about that, and fair enough, they shouldn't be,” Fellows said.

“The argument that I would make is, without the pipeline, the price is even higher than it is right now. … [While] it's really compelling to compare this year's price to last year's price and say, ‘Oh, well, it's not a whole lot lower, so the pipeline didn't do anything,’ what you need to be doing is comparing this year's price to this year's price if we didn't have a pipeline.”

How Vancouver prices compare with other Western cities

To try and do that, it’s important to understand a bit of history.

The Trans Mountain pipeline system is unusual because it can carry different grades of petroleum, from crude oil to refined products like gasoline, in the same pipe. The different grades are delivered in batches, one after the other.

That means crude oil extracted in northern Alberta can be refined into gasoline relatively close by, at one of Edmonton’s refineries, before being sent down the Trans Mountain pipeline to the west coast. These refineries have been a source of cheap gas at times for people in Edmonton, even as they create high levels of local air pollution.

Fellows argued that a 2015 regulatory change led to more of the pipeline’s space being used for oil than gasoline. With a refinery in Burnaby, B.C., unable to increase its capacity, fuel wholesalers in B.C. had to turn elsewhere to make up the difference: rail shipments or foreign imports.

That, in turn, pushed up B.C. prices compared to other western cities that are supplied with refined product by Edmonton-area refineries, such as those in Saskatchewan and Manitoba that get gasoline via pipelines like the Enbridge Mainline. (Cities in central and eastern Canada are mostly supplied with gasoline refined in those regions.)

With the expanded Trans Mountain now in service, there is theoretically more space in the pipeline again for gasoline, meaning Vancouver’s higher-cost options would not be as crucial.

The question is — has this happened?

While data show the price hasn’t noticeably dropped from early in the year, the difference between the average wholesale gasoline price in Vancouver and prices in Edmonton, Regina and Winnipeg began narrowing in July.

For over two years, gasoline in Vancouver had been between 20 and 35 cents per litre on average more expensive than in Edmonton. From July to September that gap narrowed to around 13 to 18 cents per litre. In November the difference crept up again, and Vancouver was again on average about 20 cents per litre more expensive.

What this means to Fellows is that while the narrowing of the price difference doesn’t mean the price at the pumps is any lower, it might mean the expanded pipeline is absorbing potential price jumps that Vancouver might have experienced if it had to depend on rail or imports.

“We've got inflation all over the place since the pandemic ending, right? Think about groceries. Groceries are more expensive now. Lots of stuff is more expensive now because of inflation, so what the pipeline is doing is, it's holding the line,” he said.

“It's not necessarily providing you price relief compared to the prices you paid last year, or the year before that … [but] we're not seeing the inflation and gasoline prices in Vancouver that we would be if we didn't have the pipeline.”

There are other factors at play, he added.

For one, so-called winter gasoline is produced differently, to make it ignite easier in cold temperatures, a formulation that is cheaper to make than summer gas. That helps depress winter prices.

As well, there is higher demand for gasoline in the spring and summer, when more people tend to take more road trips, usually leading to higher prices.

Research shows oil price volatility contributes to Canada's inflation

Beyond that, prices are ultimately connected with the price of Canada’s crude oil, which is influenced by global markets and other so-called benchmark oil prices in places like Europe and the United States.

Research published in July from the International Institute for Sustainable Development has shown that the volatility of the price of oil itself contributes to Canada’s inflation.

The Winnipeg-based charitable organization found that a third of Canada’s inflation from early 2021 to mid-2022 was due to energy prices, and that Canadians could save up to $15 billion each year in energy costs by transitioning to net-zero electricity grids.

Policies that steer away from oil and gas, and towards more efficient electric transportation and heat pumps, “will help Canadians save money and insulate the economy from fossil-fuel-driven inflation,” the organization wrote.

Marc Lee, a senior economist at the Canadian Centre for Policy Alternatives, agreed it makes sense that the increased capacity of the Trans Mountain pipeline system would allow for a higher supply of products, that in turn could push down prices.

Lee, who is also director of the energy policy-focused Climate Justice Project, said he looked at data showing volumes of petroleum moving through the Trans Mountain pipeline. He found there has, indeed, been a bit of a bump in the supply of refined products like gasoline.

But, he said, “the jury's still out” whether Vancouver would see long-term relief from high prices. Refinery profit margins fluctuate, he noted, and the price of gas is influenced by many different factors, so it’s hard to project.

“It's not a clean supply and demand situation,” he said.

A new factor is the threat by the incoming Trump administration to impose punishing tariffs on Canadian imports.

The U.S. buys hundreds of billions of dollars worth of Canadian products each year, including the majority, or 60 per cent, of all its imported crude oil. Tariffs would be a massive wild card that could significantly affect the price of gas in Canada.

Tom Kloza, global head of energy analysis at Dow Jones company Oil Price Information Service, said the industry is often delayed in reporting some statistics so he felt it was too early to tell the full effect of the Trans Mountain pipeline’s expansion on gas prices.

“I think it's too soon, and, quite frankly, it's going to be so complicated by the issue of tariffs,” if tariffs are imposed, he said.

Thankfully, there are other ways to lower transportation costs. The Parliamentary Budget Office found that electric vehicles are cheaper to own and maintain over eight years than gas-powered vehicles.

Think about that the next time you’re feeling pain at the pumps.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Get the inside scoop on The Narwhal’s environment and climate reporting by signing up for our free newsletter.

A Canadian government-owned energy company is defending paying over $32 million to a controversial global consulting firm to help it save money on the Trans Mountain pipeline expansion project, which was already billions of dollars over budget.

U.S.-based McKinsey & Company won the hefty contract — singled out in a recent federal audit — without any competition in October 2022. A spokesperson for the Trans Mountain company told The Narwhal it paid McKinsey the money to reduce costs and improve productivity.

McKinsey accepted the contract despite also doing consulting work for at least three oil companies that pay tolls to ship fuels on Trans Mountain infrastructure and are currently involved in a legal dispute with the pipeline operator over its proposal to increase rates.

The cost of the Trans Mountain pipeline expansion project — which ballooned from $5.4 billion to $34 billion between 2013 and 2024 — has generated significant criticism. Environmental groups have framed the project as a massive subsidy for the fossil fuel industry that runs counter to Canada’s international climate change goals and commitments.

Meanwhile, a group of oil companies have demanded more information about the escalating costs and objected to proposed toll increases meant to cover some of the overruns. 

If producers don’t pay substantially higher tolls to use the pipeline, it could leave Canadian taxpayers holding the bag — for as much as $18.8 billion, according to recent research by the Winnipeg-based International Institute for Sustainable Development.

Suncor, Cenovus and Canadian Natural Resources Limited are among the companies protesting the prospect of higher tolls. All three are on a list of McKinsey clients disclosed by the firm in unrelated court proceedings in the U.S. None responded to The Narwhal’s requests for comment.

Negar Haghighat, a consultant who advises clients about ethics and governance, said she believes Trans Mountain should have sought advice from another firm to avoid any appearance of a conflict of interest.

“There’s no reason why [McKinsey consultants] were the only option to help them with their cost reduction efforts and ideas,” she told The Narwhal in an interview. “They could have easily gone to someone who didn’t have any conflicts, perceived or otherwise.”

She added that it wasn’t a sound business practice to award the contract without any competition.

“Whether you’re buying printer paper or whether you’re looking at a multimillion-dollar consulting agreement, one way or another, you don’t want it to go out without a proper evaluation of who could do the best job for the best price,” she said.

Auditor General said Trans Mountain skipped open competition with McKinsey contract

Trans Mountain’s 2022 contract with McKinsey was among hundreds of millions of dollars worth of deals between Canada and the consulting firm that came under scrutiny in a June federal audit, which noted how public servants often failed to screen for conflicts of interest. The audit also questioned whether some of the contracts were actually needed or delivered value for money.

Canada’s auditor general said Trans Mountain skipped an open competition on the contract without clear justification, contrary to its own procurement policies.

A McKinsey spokesperson said the firm has a policy of disclosing conflicts of interest, but did not directly answer when asked if the company had disclosed any conflicts prior to accepting the Trans Mountain contract. 

“McKinsey & Company, consistent with our policies, proactively discloses both perceived and actual conflicts and follows strict protocols and have these policies to ensure we have followed the law,” spokesperson Alley Adams told The Narwhal in an email. The consulting firm previously told The Narwhal it disclosed conflicts in relation to another contract highlighted in the audit — $1.35 million to give the federal government advice about clean technology policies. That contract was awarded by the Canada Development Investment Corporation, a Crown corporation that owns Trans Mountain.

“With respect to your other questions, we would direct you to Trans Mountain for further comment,” McKinsey said about the pipeline consulting contract.

Trans Mountain declined to comment on whether McKinsey disclosed any potential conflicts or whether it was aware the firm was also representing fossil fuel clients disputing its proposed toll increases.

“Trans Mountain cannot comment on McKinsey business,” its email reply to The Narwhal said. “Please reach out to McKinsey directly for questions.”

In regards to its own staff, the pipeline operator said it was unaware of conflicts between any Trans Mountain director or officer and McKinsey.

But Trans Mountain said it agreed with the auditor general’s recommendation that it needed to improve its procurement policies to proactively search for potential conflicts.

Trans Mountain said McKinsey helped save hundreds of millions of dollars

The Canadian government purchased the existing Trans Mountain pipeline and other assets from Texas-based energy company Kinder Morgan for $4.5 billion in 2017. At the time, Kinder Morgan was threatening to cancel the project due to public opposition. Prime Minister Justin Trudeau’s government said it needed to buy the assets to ensure the completion of the pipeline expansion, which started operations earlier this year and allows oil producers in Western Canada to export more crude oil to the Pacific Coast and markets in Asia.

Trans Mountain was under fire over the mounting costs of its pipeline expansion project in 2022 shortly before it brought in McKinsey to help. A few months earlier, CBC News reported costs had ballooned to $21.4 billion, up from the previous estimate of $12.6 billion.

Although the final price tag is likely above $34 billion, Trans Mountain told The Narwhal advice from McKinsey helped save hundreds of millions of dollars, including in specific segments of the pipeline going through mountainous terrain such as Spread 3/4A in the Rocky Mountains and North Thompson region of B.C.

McKinsey has operated in Canada and globally for decades, offering advice to businesses and governments alike. It has also found itself in the middle of scandals, such as one over its role advising Purdue Pharma about its OxyContin painkiller. McKinsey reached a US$573-million settlement with attorneys general from across the U.S. as a result of its actions. At the time, the company said it deeply regretted not adequately acknowledging the tragic consequences of the epidemic, saying it was hoping to be part of the solution to the crisis going forward.

After this article was published, Adams emailed The Narwhal to say that the Trans Mountain contract was signed with McKinsey & Company Canada, which has headquarters in Toronto.

When asked whether its own staff and executives could have recommended ways to reduce project costs, Trans Mountain said its own employees initiated some of the measures that led to cost savings. The external consultants, it said, helped save significantly more than three times what Trans Mountain spent on the McKinsey contract.

“McKinsey advised of hundreds of cost and productivity initiatives that were logged over the course of the program,” Trans Mountain said in a statement to The Narwhal. “Executives and managers could have, and did, devise many of the cost savings, however, facilitation and analysis by a consultant allowed us to maximize our benefits.”

Every Canadian household on the hook for up to $1,225 to cover Trans Mountain costs: report

Research published this month by the International Institute for Sustainable Development notes that even Trans Mountain’s current proposal to hike tolls won’t ensure oil companies, instead of taxpayers, are paying for the pipeline. 

The report was written by Thomas Gunton, a professor of resource and environmental planning at Simon Fraser University and a former senior official in the B.C. and Manitoba governments. He told The Narwhal the current hike proposal still isn’t high enough to cover the true costs of shipping oil. 

“Burdening Canadian taxpayers with the cost of providing a large subsidy to the oil sector to cover transportation costs is … contrary to basic principles of public equity,” his report reads. 

Unless Trans Mountain significantly increases the tolls charged to oil companies, the report says, cost overruns on the pipeline could result in Canadian taxpayers shelling out up to $18.8 billion in fossil fuel subsidies. This would be equivalent to every Canadian household paying up to $1,255 to subsidize pipeline use for oil companies that earn billions of dollars in profits.

Updated Sept. 25, 2024, at 4:10 p.m. ET: This article was updated to add a new comment from McKinsey about how its Canadian operations have headquarters in Toronto.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Even though Trans Mountain recently estimated the wildfire risk to its pipeline running through Jasper National Park is “low,” crews were fighting to protect it in this week’s wildfires in the park.

“Canadian wildfire reaches Jasper, firefighters battle to protect oil pipeline,” said a Reuters headline.

Parks Canada confirmed in a social media post on Wednesday evening it is protecting “critical infrastructure” from the out-of-control wildfire. It listed examples such as the town’s hospital, wastewater treatment facility and parts of Trans Mountain, a 1,150-kilometre pipeline system that transports both crude oil and refined petroleum products from Edmonton to refineries and export terminals on the B.C. and Washington State coasts. The portion that runs through the park was twinned in 2008.

“Structural firefighters remain in the town and are working to save as many structures as possible, and to protect critical infrastructure. … Firefighters are en route to the town of Jasper as we speak,” Pierre Martel, director of the national fire management program at Parks Canada, said in a wildfire update on Thursday afternoon. Officials did not provide details on how many resources were used to protect the Trans Mountain pipeline.

Deciding which fires to fight, how many resources to put toward them or what to prioritize depends on what are known as the “values at risk.” Homes, businesses and campgrounds are all values, as is infrastructure, including oil and gas infrastructure. 

Parks Canada did not respond to emails and calls from The Narwhal by publication time.

Trans Mountain, purchased by the federal government in 2018, put out a statement on its website on Thursday saying the pipeline is still operational.

“We continue to work with the Town of Jasper and Jasper National Park to safely monitor the pipeline. At this time there is no indication of damage to our infrastructure, and the pipelines continue to operate safely,” the statement read.

“To ensure we are supporting local emergency services, we are using our own firefighting equipment that was placed in Jasper and bringing in water to supply our equipment and continue to deploy our sprinkler system to protect our facilities,” the statement also said.

Wildfire risks ‘low’ for pipeline in Jasper: Trans Mountain report

Trans Mountain maintains that wildfire risks to its pipeline, which was first built in 1951, remain low.

According to the corporation’s 2023 environmental, social and governance report, the pipeline was rated on a zero to 10 risk scale, with 10 being the lowest risk. The length of the pipeline running through Jasper National Park was rated an eight for wildfire risks, indicating a low risk.

“Our pipeline is buried, therefore the potential impact to our assets from wildfires or forest fires is relatively low across the full route,” the report said.

It also noted, “We protect our above-ground assets (storage terminals and pump stations) through procedures, training, detailed wildfire response planning and by maintaining an inventory of response equipment.”

It was unclear why the pipeline was prioritized for protection when the overall wildfire risk to the pipeline was rated as low.

Trans Mountain declined an interview with The Narwhal and instead provided a link to its Thursday statement. 

Can a wildfire affect a pipeline buried underground?

While the Trans Mountain Pipeline is buried underground, some academics suggest there are still wildfire risks.

A study published in 2018 suggests the bitumen that flows through oil and gas pipelines is highly flammable and may have dangerous environmental impacts if ignited by a wildfire. This is because of diluent — used to dilute bitumen so it can flow easily through pipelines — and natural gas used to heat the bitumen at oilsands facilities and generate power at plants.

“Both the natural gas and diluent can pose high risks if exposed to fire, though the pipes carrying them are usually buried underground,” researchers wrote.

However, according to pipeline expert Ron Hugo, the risks are still fairly low.

Hugo, a professor at the University of Calgary’s Schulich School of Engineering, said wildfires heat the soil around the pipeline, transferring heat to the bitumen inside. But the temperature rise would likely be negligible, he said in an interview. 

The pipeline is not an oxygen-rich environment, making explosions unlikely, he added.

“I don’t think it would be much of a concern,” Hugo told The Narwhal. “The fire is moving so quickly that the temperature rise below the surface is very, very small. And by very, very small it means it will be hard to measure.”

Though the pipeline itself is buried, some infrastructure is above ground, including pump stations — facilities that increase the pressure and flow rate in the pipeline. There is at least one pump station in Jasper. Sections of the pipe that could not be buried, say to cross a river, may also be above ground.

Hugo said above-ground infrastructure, like pump stations, has protections such as large yards free from flammable organic materials.

“All of those things, including assessing and protecting infrastructure, makes [the above-ground infrastructure] low-risk,” he said.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

The water is calm at Jacko Lake near Kamloops, British Columbia. Tawny grasslands and rolling hillsides surround the quiet little lake, where a few scattered fishing boats carry solitary figures. Next to the lake, beyond a wire fence and “private property” signs, a completed segment of the Trans Mountain pipeline expansion project snakes through the beige landscape — an area land defenders say the pipeline should never have touched.

This area is called Pípsell to members of the Stk’emlúpsemc te Secwépemc Nation, and it’s one of the nation’s few remaining sacred sites, according to Knowledge Keeper Mike McKenzie. This is where fundamental Secwépemc oral histories originate and where traditional medicines grow. It is a burial ground and a cultural keystone vital to present and future generations of the nation.

“They dug through the medicines. They made roads over it. They parked all their stuff on it,” McKenzie says, adding that as a Secwépemc Knowledge Keeper, it’s his duty to protect this land. “I was raised to protect it. I was raised to stand by our word no matter what.”

Last August, the federal government-owned Trans Mountain applied to change the plan for its oil pipeline expansion project through Pípsell — changes resolutely opposed by the Stk’emlúpsemc te Secwépemc Nation chief and council, which had previously agreed to the pipeline’s overall construction. Some land defenders have opposed the pipeline since its inception, leading to tension within the nation. 

Despite the objections, the Canada Energy Regulator approved the new plans last September and construction is now complete.

The Trans Mountain pipeline became fully operational on May 1. 

In response to Trans Mountain’s changes in Pípsell, the nation’s chief and council said Secwépemc law was undermined. It has now ramped up title claim efforts to affirm land rights over Pípsell and set a precedent on how the nation can protect its territory from industry — and the Crown. What this case means for the future of the pipeline as crude oil starts to flow through Pípsell remains up in the air.

Stk’emlúpsemc te Secwépemc Nation continues efforts to affirm Aboriginal Title in its territory

Aboriginal Title — the term in Canadian law that recognizes inherent Indigenous Rights to land or territory — has been achieved before. In 2014, the Tŝilhqot’in Nation in Williams Lake, B.C., won its title case in the Supreme Court of Canada after 25 years of legal proceedings prompted by provincially licensed timber harvesting. The decision granted “full ownership, benefit and control” of a portion of their territory — a first in Canadian history. According to the ruling, once title rights are established, existing and proposed developments within title land may not move forward unless first consulted with the Tŝilhqot’in Nation.

“Achieving title is a court declaration that the Aboriginal Peoples’ title to the piece of land exists, that in law makes clear to the world they are the owners of that land and the rightful decision-makers about that land,” David Robbins, lead counsel in the Tsilhqot’in case, says in an interview. “[Nations] have power to choose whether or not to consent to any use of their land, including industrial projects.” 

The Stk’emlúpsemc te Secwépemc Nation has been similarly working to assert title claim for years. In 2015, after an open-pit copper and gold mine was proposed, the Stk’emlúpsemc te Secwépemc Nation filed a civil claim with the B.C. Supreme Court to affirm its title claim over the land, saying mining operations in the area have never benefited the nation. 

The nation sought the right to use its land according to traditional customs, including participating in its own mining operations and trade systems with other First Nations. The nation filed another claim in 2019, noting no progress was made after the first claim. 

Achieving Aboriginal Title over Secwépemc land would “set a precedent” for future legal cases between Indigenous groups and private industry, according to Raven Trust, a charity that raises legal funds for Indigenous groups. 

In February, the nation held community workshops to discuss “crucial updates” to its title case. The nation declined to provide The Narwhal with details.

“It’s not the case that as soon as you get title, any kind of government decision that’s been made with respect to that land, that gets thrown out the window,” Safayeni, who represented Amnesty International in the 2014 Tsilhqot’in title case, says. “It’s not as simple as they get title, so the pipeline is dead.”

“But it would give [the Stk’emlúpsemc te Secwépemc Nation] a foothold to argue that now that we’ve established title, the approval and the continued presence of the pipeline is so unreasonable and imposes such a hardship [as to] how we want to enjoy and exercise our right to these lands, that it’s just too much of an infringement and [Trans Mountain] will have to figure out another way.”

Robbins agrees that the implications of the case are not clear at this point. If title was established, he says, “the burden would be on the Crown to prove that the pipeline is justifiable going to the land. If [the Crown] can’t prove that then the question would be, what remedies should the court issue?” 

And that, he says, would be something to argue in court.

Osgoode Hall Law School associate professor Dayna N. Scott suggests the state could prove Aboriginal Title was affected in cases of compelling public interest that are also consistent with reconciliation. “The case would have to be made that [the Trans Mountain pipeline] meets that test,” Scott wrote in an email to The Narwhal.

What makes this latest round of title claim efforts unique is that the catalyst is an energy project wholly owned by the federal government.

Trans Mountain’s changing plans for pipeline construction led to Stk’emlúpsemc te Secwépemc Nation’s pushback 

The Trans Mountain pipeline expansion project has been in the works for more than a decade. The project, formerly owned by Texas-based Kinder Morgan, twins an existing pipeline between Edmonton and Burnaby, B.C., and will add approximately 990 kilometres to the route, tripling crude oil flow.

The federal government purchased the project and other assets for $4.5 billion in 2018. Since then, costs have stretched past $30 billion and the project has faced several construction delays. 

The latest round of debate kicked off last summer when Trans Mountain filed what’s known as a deviation application for a 1.3-kilometre stretch within Pípsell — essentially, the company wanted to change both the exact route through Pípsell and the method of construction it used to lay the pipe. It had previously been approved to use a technology called micro-tunnelling, known to be less disruptive to the landscape as it happens primarily underground. Instead, it wanted to use a method that included digging open trenches.

In its application, the company said it tried to address issues it encountered during micro-tunnelling attempts, and faced “significant technical challenges.” 

The 2023 change directly undid plans set out in a previous 2022 application that had established micro-tunnelling as the construction method, approved by the Canada Energy Regulator and developed after consultation with the Stk’emlúpsemc te Secwépemc Nation.

The lack of consultation on the 2023 application that removed the use of the less-disruptive micro-tunelling method set off alarm bells for the nation. Trans Mountain’s plans, it said, were filed without giving the nation enough time to evaluate the proposed changes. In July, the nation sent a letter to the Canada Energy Regulator stating the application “does not represent a collaborative process.” 

The Canada Energy Regulator held a three-day hearing in Calgary last September. In an emailed response to The Narwhal, a spokesperson for the regulator said deviation applications are typically assessed in writing, and an in-person hearing was established for Pípsell after the nation filed its letter. The spokesperson said the regulator accommodated multiple requests for delays from parties in the nation. 

The regulator ultimately approved the deviation and construction went ahead in October. 

The regulator told The Narwhal micro-tunnelling was “not technically feasible and that continuing to pursue it could cause more surface disturbance to the area.”

Romilly Cavanaugh, a former environmental engineer with Trans Mountain, disagrees. Cavanaugh, who left Trans Mountain in 1996 and is now opposed to the pipeline expansion project, says micro-tunnelling may be challenging, but not impossible. “I believe that is the main issue: [Trans Mountain] prioritize[s] saving money and going more quickly over the concerns of Indigenous people.” 

In December, the B.C. environmental assessment office conducted an inspection at Pípsell and concluded Trans Mountain was doing an adequate job of consulting local Indigenous groups, as well as fencing off and avoiding damaging sensitive archeological features, such as a burial mound. A Secwépemc monitor was on-site during the inspection and confirmed the findings. 

According to the Canada Energy Regulator’s report, the Stk’emlúpsemc te Secwépemc Nation said no mitigation, other than rerouting the pipeline around Pípsell, was acceptable; The entirety of Pípsell is sacred — not only the specific archeological and cultural sections — and Indigenous monitoring won’t change the fact the land will be disturbed. 

In an email to The Narwhal, a Trans Mountain spokesperson said the company recognized the sacred importance of Pípsell and is “committed to remaining respectful of the spiritual and cultural significance of this land.”

The nation released a statement after Trans Mountain’s plans were approved, saying the decision “undermines Secwépemc law” and failed to recognize Indigenous Rights affirmed under the United Nations Declaration on the Rights of Indigenous Peoples Act.

Knowledge Keeper says true consultation would look very different

At the foundation of some of the tensions is the existence of a mutual benefit agreement — a type of agreement that sets out a long-term relationship between Indigenous communities and a project proponent, often including job training, business opportunities and community services. 

Trans Mountain says it has entered into 69 agreements with 81 Indigenous communities, including the Stk’emlúpsemc te Secwépemc Nation.

The nation had originally filed a statement of opposition against Trans Mountain’s proposed route in 2019 — but withdrew that statement after signing a confidential mutual benefit agreement with the company. 

Industry tends to benefit from the confidential nature of these agreements, according to Shiri Pasternak, an associate professor of criminology at Toronto Metropolitan University.

“It really restricts our ability to scrutinize how Indigenous Rights are being undermined in some cases,” she says.

The Narwhal has previously reported on how benefits agreements can come with clauses prohibiting First Nation leaders from publicly speaking out against a project. While the Stk’emlúpsemc te Secwépemc Nation’s agreement is confidential, the Canada Energy Regulator’s decision report noted how the agreement prioritized ensuring minimal impacts on Pípsell and protecting the nation’s cultural values. 

The Canada Energy Regulator report also noted Trans Mountain’s view that the benefit agreement was evidence of the Stk’emlúpsemc te Secwépemc Nation’s consent to the pipeline’s presence in Pípsell. The nation, however, said the agreement alone did not constitute free, prior and informed consent and the deviation into Pípsell was in opposition to the agreement’s conditions. A response to Trans Mountain’s deviation application in 2023 written by the nation’s lawyer, Joelle Walker, said any support or consent to the expansion project is conditional on Pípsell being explicitly protected.

McKenzie says the elected chief and joint council of the Tk’emlúps te Secwépemc Nation and Skeetchestn Indian Band handled all discussions with Trans Mountain, without sharing details with the community.

But for previous industrial proposals, McKenzie said the nation handled consultations differently.

For example, in 2017, the Stk’emlúpsemc te Secwépemc Nation assembled a panel of 26 community members — youth, Elders and family representatives — to discuss the open-pit copper and gold mine project proposed by KGHM Ajax Mining in Pípsell. McKenzie was on this panel, which presented its decision to the chief and council to make the final decision.

After the process, the nation did not give its consent to the mining project, saying in its decision the mine was “fundamentally in opposition to the [nation’s] land-use objective for this sacred site.”

The mine was ultimately rejected by the provincial and federal governments and was the catalyst for the nation’s civil claim at the B.C. Supreme Court to affirm its title claim. 

Without that type of community consultation, which is required by Indigenous law, benefits agreements cannot constitute consent to the overall pipeline, McKenzie says. “I can say with 100 per cent certainty that we have not given consent to the pipeline at all,” he says.

Secwépemc matriarch April Thomas, who has been outspoken against mutual benefit agreements, agrees. She says chiefs and councils that sign into the agreements are “sell outs” that have “lost their way.” 

The Stk’emlúpsemc te Secwépemc Nation declined to respond to these allegations, citing legal sensitivities. It referred The Narwhal to a statement saying the views of individual nation members don’t constitute the views of the nation and the joint council is the only body authorized to speak on behalf of the nation.

With Trans Mountain coming online, land defenders question the future and their ‘last stand’

Thomas believes Trans Mountain was never given consent to build on this land. 

“The government of B.C. and these corporations like Trans Mountain pipeline are on unceded territories,” she says. “Our land is not for sale. And even in our belief system, we don’t own the land, the land owns us. We’re here as stewards of the land, to protect and care for the land.”

Meanwhile, crude oil will begin to flow within days. 

After years of speaking out against the pipeline, McKenzie intends to take a step back.

“As Knowledge Keepers, as spiritual peoples, you get to a point where you did everything you can do,” he says. “If this is our last stand, what if our laws come to fruition? Our Elders say, [the] breaking [of] our law is already happening and that’s why we have climate change. …The land and the sky turns on us.”

Updated on May 1, 2024, at 10:24 a.m. PT: The headline and the story were updated to reflect the Trans Mountain pipeline expansion becoming fully operational.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

As Canada’s last wild spotted owl goes missing, a legal case that could change Ottawa’s approach to critically endangered species is poised to begin today on the seventh floor of a Vancouver courtroom. The case sets the environmental group Wilderness Committee against the federal government, in a showdown that tests the urgency with which Canada’s Species at Risk Act must be applied to protect wildlife at risk of extinction. Watching closely from the sidelines is the BC NDP government, which for months has lobbied Ottawa to stay out of provincial affairs while it continues to approve industrial logging in the spotted owl’s old-growth habitat.

The environmental law charity Ecojustice, acting for the Wilderness Committee, will ask a federal court judge to consider the question: did Canada’s Environment Minister Steven Guilbeault act unlawfully when he delayed — for eight months — asking the federal cabinet to issue an emergency order to prevent the extinction of the spotted owl from Canada? 

“That is too, too long to wait for anything that you would call an emergency,” Joe Foy, protected areas campaigner for the Wilderness Committee, told The Narwhal. “And when you’re down to one last wild-born spotted owl, I don’t know how else you could define it but an emergency.”

“Can the minister delay for so long on such a critically endangered species?” Foy asked. “The answer that we get will affect many species going down the road, as we try to get better species protection laws.”

The spotted owl has been in the limelight off and on for decades, as efforts to protect it clash with plans to log the commercially valuable old-growth forests where the owl nests in large trees and preys mainly on flying squirrels and bushy-tailed woodrats. In 2003, the spotted owl was listed as endangered under Canada’s newly minted Species at Risk Act. Two decades later, a recovery plan for the species has still not been finalized. About 30 spotted owls, including wild owls captured by B.C. government biologists, live in outdoor aviaries at a captive breeding centre in Langley, east of Vancouver, where staff hatch eggs in incubators in the hopes of one day returning the raptor to Canada’s wild. 

In October 2022, with only one wild-born spotted owl left in B.C.’s forests, Ecojustice petitioned Guilbeault demanding an emergency order be issued under Canada’s Species at Risk Act to save spotted owls. An emergency order would give Ottawa the power to step in and make decisions which normally fall to B.C., such as whether to grant logging approvals in critical habitat for the spotted owl, a chocolate brown bird with distinctive white flecks. 

It’s not the first time Ecojustice, acting for the Wilderness Committee, has petitioned the federal environment minister for an emergency order to protect spotted owls. The law charity’s October 2020 petition for an emergency order was stymied after B.C. and Ottawa struck a deal to defer logging in two Fraser Canyon valleys that, at the time, were home to the country’s last three wild-born spotted owls — the first step in a nature agreement aimed at strengthening conservation efforts in B.C. The two governments said the nature agreement would feature pilot projects deploying new approaches “to protecting species at risk and enhancing biodiversity,” starting with immediate action to support efforts to recover the spotted owl.

Since then, things have gone from bad to worse for the spotted owl, while the long-promised nature agreement has not yet materialized. Two of the three spotted owls — males in the Spuzzum and Utzlius valleys — subsequently disappeared and were presumed dead, leaving just one wild-born female. The Spuzzum male was the mate of the lone female; the pair made history after they hatched the last three wild spotted owl chicks in Canada. The three juveniles were captured by provincial government biologists, who took them to the government-funded captive breeding centre. 

In an emailed response to questions from The Narwhal, after turning down an interview request, the B.C. Ministry of Water, Land and Resource Stewardship confirmed provincial biologists failed to detect the female during routine acoustic surveys this year, saying the owl was last detected a year ago. “Field crews consider the wild female to be alive at this time and continue to monitor for a detection,” the ministry optimistically stated. It also said two spotted owls from the breeding centre that were released this summer are still alive. Last year, for the first time, three breeding centre owls were released near the Fraser Canyon. One owl was found injured and returned to the centre, while the other two died over the winter. 

New clear-cutting documented in B.C.’s spotted owl critical habitat 

Following the 2022 Ecojustice petition, Guilbeault said in January he would recommend the federal cabinet issue an emergency order to protect spotted owl habitat from imminent logging. But Guilbeault didn’t follow through until late September, when the cabinet rejected the order. The federal cabinet is not required to provide reasons for its decision and none were given. 

The decision was immediately slammed by Spuzzum First Nation Chief James Hobart, who said he was extremely disappointed. “How can Canada delay and then walk away from an emergency order to protect the spotted owl, a species in such a dire state of emergency?” the chief asked in a statement released today in support of the legal case. 

A cabinet minister briefing document obtained by The Narwhal showed the B.C. government lobbied intently behind the scenes to dissuade the federal cabinet from issuing an emergency order. The briefing document cited socio-economic impacts and B.C.’s “significant protections” for spotted owls as reasons why Ottawa should back away. 

During the eight months Guilbeault delayed making the recommendation to cabinet, the Wilderness Committee documented new clearcutting and B.C. government logging approvals in spotted owl critical habitat, including in a wildlife habitat area in the Fraser Valley the provincial government had set aside for spotted owl recovery.

Ecojustice lawyer Andhra Azevedo said B.C. and Canada have taken a “talk and log” approach since Guilbeault determined plans for imminent logging jeopardized the recovery of the species. “If you act after the logging has already occurred, you haven’t obviously done anything to prevent the emergency you’ve identified from happening,” Azevedo said in an interview. 

Instead of taking emergency action to step in as B.C. failed to protect the spotted owl’s habitat, Azevedo said Guilbeault’s delay allowed the province to further threaten the owl’s recovery through further logging. “The eight-month delay to recommend an emergency order, followed by cabinet’s denial of the order, makes a mockery of emergency orders under the Species at Risk Act.” 

Emergency orders generally rely on environmental organizations to do the groundwork to determine imminent threats to a species at risk of extinction, Azevedo said. Once lawyers acting for an environmental organization petition the environment minister for an emergency order, the federal environment ministry conducts its own threat assessment. 

“And so, in this case, we know that in January, Environment Canada determined that there was 2,500 hectares of spotted owl habitat that was not just generally at risk of logging, but a very high potential of being logged in 2023.” The logging season in B.C. is roughly from March or April to November, Azevedo pointed out. “And so that puts a pretty clear timeline on what the emergency was.” 

Court docs offer a glimpse of B.C. government’s mindset on spotted owl

Andrea Olive, a University of Toronto professor whose research focuses on biodiversity and conservation policy, is among those watching the legal case closely. “If this court case rules on the side of the spotted owl, it may open the door for other species, or at least make the government pretty nervous that that could happen,” Olive said in an interview. Although no one wants to see a situation in which Ecojustice must repeatedly petition the federal government for emergency orders to protect critically endangered species, Olive said the “precedent-setting” case could prod the federal government into taking timelier action under the Species at Risk Act. 

The federal government is “very much in a difficult spot” when it comes to recovering spotted owls and other at-risk species in British Columbia, Olive pointed out. Unlike other provinces, B.C. lacks a stand-alone law to protect close to 2,000 species officially at risk of extinction, despite a 2017 promise from the BC NDP government to enact such legislation. 

Olive said “we’re not really supposed to get to that place” where emergency provisions in the Species at Risk Act are used to compel a province to take action. “It’s still putting a burden on the federal government to do something that’s really in the province’s jurisdiction … British Columbia should have done something. It’s their failure.”

In its emailed statement, the B.C. Ministry of Water, Land and Resource Stewardship said it can’t comment on a matter before the courts. “B.C. remains confident that through the combined efforts of a team of dedicated provincial staff at the breeding centre and our First Nations partners, we will continue moving towards the right path to spotted owl recovery,” the ministry said.

Documents submitted for the legal case offer a glimpse of the B.C. government’s mindset and priorities. In an Aug. 8 letter to Guilbeault, B.C. Minister of Water, Land and Resource Stewardship Nathan Cullen discussed the captive breeding and release program at length, calling it the “best chance for spotted owl survival and recovery in B.C.” when coupled with the removal of barred owls, a bigger and more aggressive species that has moved into spotted owl territory. More than 200 barred owls have been relocated or “removed” — a euphemism for killed — from spotted owl territory since 2007, Cullen noted. 

Cullen said the province’s spotted owl recovery program is “scaling rapidly” following extensive investments in spotted owls over the past 16 years, including about $1 million a year for the breeding centre. But “significant additional immediate capital investments and land acquisitions are required,” Cullen said, asking the federal government to help with funding.  

In the letter, Cullen claimed the federal government’s Trans Mountain pipeline expansion project “exposed the captive breeding population to avoidable risk,” contrary to the precautionary principle in the Species at Risk Act and contrary to expert advice. Cullen noted the project was allowed to proceed directly adjacent to the captive breeding centre in Langley “during this year’s critical breeding window,” despite B.C.’s concerns. 

He then dove into minute details, saying two breeding females died and the average egg fertility for the first clutch of eggs was significantly reduced this year. Reduced breeding outcomes in 2023 could be significant for the spotted owl’s survival and recovery, potentially impacting the population growth trend, Cullen continued. “With such a low population size and limited number of breeding years per female, the consequences of these impacts are amplified and potentially dire.” 

B.C. believes there was a lack of regulatory oversight and has filed a complaint with the Canadian Energy Regulator, Cullen noted. 

The Narwhal earlier reported the B.C. government approved 24 new cutblocks for the Trans Mountain pipeline in spotted owl critical habitat, including in old-growth forests. 

Cullen also outlined in detail how the B.C. government has set aside enough habitat to support 250 paired mature owls in the wild. But Foy scoffed at that notion, asking: “So how come we’re down to one? If everything’s all peachy keen, what’s going on there?” 

The answer, Foy said, is that the spotted owl’s habitat is so fragmented the species can no longer replicate in the wild. Juvenile spotted owls can’t safely disperse to new territories in search of food, shelter and mates. 

In an emailed response to questions, Environment and Climate Change Canada media relations spokesperson Eleni Armenakis said the federal government recognizes more needs to be done to support the recovery of the spotted owl. “Collaboration with British Columbia and First Nations is the preferred approach for achieving the species’ recovery,” she said. “The government of Canada will not be making an emergency order at this time.”

Building off current negotiations towards a tripartite agreement on nature conservation, the federal government is working closely with its partners to ensure “a suite of measures to support spotted owl recovery are implemented,” Armenakis said. “This includes captive breeding and release and habitat protection.”

Armenakis said Guilbeault has fulfilled his obligation under the Species at Risk Act and recommended an emergency order to protect the species to the federal cabinet, “having previously concluded the species was facing imminent threat to its recovery.”

Foy said the Wilderness Committee is motivated to take legal action because so many species are struggling. “We need to stop and realize that, only a decade ago, we weren’t talking about things like the last wild spotted owl, or entire herds of mountain caribou disappeared, wiped off the map,” he said. “And today, we are talking about those things … All of this means every little finger hold we get, every opportunity we get to put this fastly deteriorating environmental situation in front of one of our courts, in front of our politicians, I believe we should take every opportunity we can.”

“It’s never too late to help the spotted owl,” Foy said. “I’m caught between painting a rosier picture than it is, but also in not giving up while there is still a chance at life.” 

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Trans Mountain’s $34-billion oil pipeline expansion entered into commercial operation on May 1 — 12 years after a Texas-based fossil fuel firm first trumpeted the project.

The road to the fossil fuel pipeline, now owned by the federal government, has been winding and rough. It has involved complex relationships with First Nations with varied views of the project, arrests of people demonstrating against the pipeline’s environmental impact, multiple Supreme Court battles, massive cost overruns and repeated construction delays.

Even though it’s now built, the story isn’t over. Key questions remain about potential Indigenous ownership, and what fees oil companies will ultimately pay to use the pipeline. At the same time, some First Nations still oppose the project.

Let’s take a step back. This pipeline saga has gone on so long that you might be wondering, “Wait, what is Trans Mountain again” We’ve got you covered.

Here’s a refresher on some of the major twists and turns in the Trans Mountain story.

What is the Trans Mountain pipeline?

The current Trans Mountain pipeline transports heavy crude oil and refined petroleum products like gasoline from the Edmonton area across 1,150 kilometres, through B.C., to refineries and export terminals on the West Coast, including to Washington State south of the border.

Trans Mountain was established in 1951 and was operational by 1953, according to the company’s website. The pipeline was built to take advantage of an oil boom in Alberta, after Imperial Oil discovered crude near Edmonton.

Representatives from the federal government, Alberta and B.C. endorsed the idea of a new pipeline from the Prairies to the West Coast in the 1950s in order to “create a vital market for Alberta’s crude oil resources,” according to a historical background report on Trans Mountain written by Toronto Metropolitan University associate professor of history Sean Kheraj. For its part, Trans Mountain sold the idea of a pipeline as a piece of Cold War strategic defence infrastructure, supplying the West with energy in the event of war.

At the time it was built it could carry 150,000 barrels of oil per day. According to Kheraj’s report, over the decades the pipeline system expanded and contracted depending on global energy markets and Canadian oil consumption patterns.

In the 1990s, the pipeline experienced growth, Kheraj wrote, as the Alberta oilsands began to produce more and more heavy crude oil. In the 2000s the pipeline was expanded with new sections of pipe and new pump stations. Its capacity increased to 300,000 barrels per day. The latest proposed expansion would almost triple that capacity.

Data compiled by the B.C. Utilities Commission shows how the Trans Mountain pipeline has already helped solidify Canada’s status as the fourth-largest crude oil exporter in the world — and a major supplier of crude oil to the United States, where nearly all of Canada’s exported crude has typically ended up.

The majority, or 53 per cent, of the petroleum products sent down the pipeline over the last two decades or so was exported to the United States, the commission’s data shows, while another 21 per cent was loaded onto oil tankers at the Westridge Marine Terminal in the Vancouver area — some of which head to refineries on the U.S. West Coast. The remaining 26 per cent was routed to B.C. destinations.

While it provides fossil fuel resources that communities have used for decades, it has also been controversial from the start. The Union of British Columbia Indian Chiefs said the original construction “damaged and destroyed at least 58 Indigenous archaeological sites — including village sites and burial grounds.” The pipeline was built during a time when Indigenous Rights and Title were even more ignored than they sometimes are today.

The pipeline has also been an environmental threat. Between 1961 and 2019 the company said it spilled crude oil, diesel fuel and other substances at least 84 times, including in 1985 when a tank farm near Edmonton spilled nearly 10,000 barrels of oil. In 2020, the pipeline system spilled 1,200 barrels of crude oil in B.C. near the source of Sumas First Nation’s drinking water, a leak made more risky in 2021 when floodwaters exposed sections of the pipeline.

What’s this about an expansion project?

Fast forward to the 2010s. The oilsands were booming, with new mining technologies and new megaprojects digging up more and more crude oil (and producing more carbon pollution). Fossil fuel companies like Imperial Oil, Suncor, Cenovus, Canadian Natural Resources and others claimed they could reach new markets for their oil by expanding the pipeline.

By 2012, Texas-based Kinder Morgan, which had bought Trans Mountain seven years earlier, said it had determined there was enough demand to double the capacity of the pipeline to 600,000 barrels per day. The next year, Kinder Morgan applied to pursue an even bigger project, building almost 1,000 kilometres of new pipeline and increasing capacity so that it could ship up to 890,000 barrels per day. The expansion also proposed many more pump stations, storage tanks and tanker facilities.

The result would mean an explosion of oil tanker traffic in the Burrard Inlet near Vancouver, from roughly 60 tankers per year to more than 400 to haul away all that extra crude.

As regulators considered the project, the political winds shifted. The NDP led by Rachel Notley were elected in Alberta in 2015, and the Liberals led by Justin Trudeau were elected federally the same year. Both Trudeau and Notley talked about climate change and the need to get greenhouse gas emissions down. Both would also support the Trans Mountain pipeline expansion project.

Trudeau said Canada needed both “pipelines and wind turbines” to achieve its goal of fighting climate change — and that he saw his government’s job as ensuring there is a “market for our natural resources” as much as ushering in the energy transition. It was an echo of a message he sent in 2013 in Calgary, when he said the government’s role was to “open up markets abroad for Canadian resources and to help create responsible, sustainable ways to get those resources to those markets.”

Notley also told the federal energy regulator at the time, the National Energy Board, in January 2016 that the Trans Mountain pipeline expansion was in Alberta and Canada’s best interests. That May, the regulator recommended the pipeline be approved, subject to 157 conditions.

The prime minister approved Kinder Morgan’s expansion project in November 2016 — despite heavy criticism that the regulator’s review didn’t consider climate and other environmental impacts, and that it ignored scientific information such as the impact of oilsands development on at-risk species and human health.

Trudeau would later admit that his approval of the project was a political “trade off” for getting the Alberta government to sign on to his national climate plan.

In 2019 Trans Mountain estimated that the pipeline expansion and associated marine activity would generate about 400,000 tonnes of greenhouse gas emissions each year. The company has an emissions reduction plan that commits to cutting emissions 100,000 tonnes by 2030 and reaching net zero by 2050.

But that doesn’t address the impact on the climate of burning all the crude oil that the expansion project will help export out of Canada. Scientists have concluded that oil and gas production must be dramatically reduced to slow the dangerous effects of climate change. The Washington-based non-profit Oil Change International has found that Canada’s planned new oil and gas extraction from 2023 to 2050 is the equivalent of building 117 new coal plants. The estimated pollution from this and other oil and gas expansion around the world would make it impossible to prevent global average temperatures from rising by more than 1.5 degrees Celsius above pre-industrial levels, according to the advocacy group.

Hold on. I thought the government owned the pipeline?

Not so fast. After Trudeau’s approval, opposition to Kinder Morgan’s expansion project only increased. For one, several directly affected First Nations launched legal actions, including the Tsleil-Waututh First Nation .

In June 2017 a coalition between the B.C. NDP and Greens won power in the province after former premier Christy Clark’s minority government lost a no-confidence vote. The new premier, John Horgan, said he would use “every tool in our toolbox” to stop the expansion project. The Quebec government also objected to the pipeline on the grounds the government was intruding on provincial powers.

Protests near the site of construction work led to arrests, including eventually Green Party Leader Elizabeth May. Things were heating up.

Journalists honed in on the flawed process behind the pipeline’s approval, discovering the Trudeau government had pressed forward despite evidence that First Nations felt the consultations were “paternalistic” and failed to address their rights.

In April 2018, amidst all the inter-provincial fighting and public demonstrations, Kinder Morgan paused its work and threatened to walk away from the project in a matter of weeks unless it received “clarity” on how it could build the pipeline through B.C., as the provincial government was still heavily opposed.

“A company cannot resolve differences between governments,” Steve Kean, the CEO at the time, said in a press release.

That sent the federal government scrambling to bring Horgan and Notley together and come up with a plan, or watch the pipeline project be abandoned.

Trudeau had already rejected another proposed pipeline backed by Enbridge called Northern Gateway, and he was facing calls from Notley to offer serious financial help for the project, in the same way the federal government had bailed out Air Canada during the 2009 financial crisis.

Trudeau had also, by this point, made it part of his political identity to strongly support the pipeline expansion. “Access to world markets for Canadian resources is a core national interest. The Trans Mountain expansion will be built,” he tweeted at the time.

The next month, the government announced it was purchasing both the pipeline and its expansion project from the company for $4.5 billion. Trans Mountain became a subsidiary of a Crown corporation called the Canada Development Investment Corporation, and would eventually benefit from significant state-backed financing and loan guarantees.

What happened to the big legal actions over the 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 a series of high-profile legal victories for the government following that decision has allowed it to continue to expand the pipeline.

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 January that year, the Supreme Court also rejected B.C.’s attempt to block the project.

B.C. had tried to amend a provincial law to essentially ban interprovincial shipments of heavy oil, despite the constitution handing Ottawa jurisdiction over interprovincial projects.

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.

When was construction finished, and how much has it cost?

When Kinder Morgan originally applied to almost triple the capacity of Trans Mountain, the company projected it would cost $5.4 billion and be “operational in late 2017.” Over the years the price tag has steadily increased, while the projected in-service date of the pipeline has continued to slip:

• By 2016, Trans Mountain was projecting a price tag of $6.8 billion and an in-service date of December 2019;• By 2018, the total construction cost had jumped to $9.3 billion and the in-service date had moved to December 2021;• By 2020, the price had risen to $12.6 billion and the in-service date had moved to December 2022;• By 2022, Trans Mountain increased the price tag to $21.4 billion and said it expected “mechanical completion” in September 2023;• By 2023, it pegged the cost at $30.9 billion and an in-service date of March 31, 2024; and• By 2024, the cost was estimated at $34 billion with commercial operation beginning May 1, 2024.

What has kept Trans Mountain’s costs rising and finish date slipping?

In an August 2023 letter to the federal regulator, Trans Mountain outlined the factors it saw as contributing to delays and cost overruns, compared to the assumptions it made for the project in 2016 and 2017, along with contractors and engineering firms.

In terms of delays, two major issues it cited were regulatory approvals and consultations with First Nations.

For example, the company had assumed “all critical permits and regulatory approvals” for the expanded pipeline would be secured by 2017, it wrote in the letter. But the Federal Court of Appeal’s decision to quash the first approval sent the process back to the drawing board until Trudeau approved it again in 2019.

The Federal Court of Appeal decision meant “Trans Mountain was required to conduct significant additional Indigenous consultation” that the company said, “further delayed the execution of the expansion project.”

Provincial regulatory processes “also took far longer to complete than expected,” the company said.

The regulatory delays, in turn, meant construction on the pipeline would substantially occur in 2019 and later — during a time when construction resources went from being in “abundance” to being tight, as competition for labour in B.C. heated up.

Two other large industrial projects in B.C., the Site C hydroelectric dam and the Coastal GasLink pipeline, were also being built and competing for resources, Trans Mountain said.

The labour shortage meant up to a fifth of the Trans Mountain expansion project’s workforce has been made up of apprentices, the company admitted in the letter. Having so many apprentices has required “additional oversight and ultimately lower productivity,” it said.

Trans Mountain also encountered a “previously unidentified, extensive abandoned landfill site” during construction on the pipeline between Burnaby and Coquitlam in B.C. That incident “required prolonged and extensive mitigation,” the company wrote in the letter.

The pipeline expansion project ran into several obstacles related to the COVID-19 pandemic, like B.C. Public Health officials restricting work on big projects in 2021 to limit the spread of COVID, as well as wildfires and flooding in B.C. and worker safety issues.

Wildfires and flooding in 2021 “resulted in forced shut-downs, associated demobilization and remobilization of resources, and missing key seasonal construction windows,” the company wrote in the letter.

In October 2020, a person working on the project died on the worksite. Trans Mountain was fined by the federal regulator for not putting in place processes to keep workers safe. Alberta Occupational Health and Safety also laid charges related to the death. Then in December that year, another worker was “seriously injured.” The company suspended all construction operations in the B.C. Lower Mainland.

The company estimated in 2022 that safety measures due to the pandemic and to extreme heat and wildfires had added about $1.4 billion to the cost. Other safety and security requirements added another $500 million, it said at the time.

In terms of costs, land values, in particular in the Lower Mainland, have jumped roughly 350 per cent compared to the initial cost estimate, Trans Mountain wrote in its 2023 letter. By March that year, the company was citing both inflation and global supply chain issues as reasons behind the total project cost surging.

Overall, by 2023 construction had progressed considerably from where it was in 2016. By July of last year, the first oil tanker was loaded at Trans Mountain’s dedicated berth at the Westridge Marine Terminal, while by August the company indicated construction was “94 per cent mechanically complete” — a term that typically means the item has been built but not tested or commissioned.

What’s happening with Indigenous Rights and the pipeline now?

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 Mountains approached construction of the new pipeline.

Trans Mountain requested a change in the pipeline expansion’s route and construction method after running into problems drilling a tunnel in lands sacred to the nation, and the Canada Energy Regulator approved that request in the fall of 2023, despite the fact the Stk’emlúpsemc te Secwépemc Nation said they had never consented to such a change.

Meanwhile, the company warned that if it was denied regulatory approval, the completion date for its expansion project would have been pushed back again, possibly until next year, incurring hundreds of millions of dollars in extra costs.

But the nation’s chief and council are ramping up efforts to affirm Aboriginal Title in its territory.

Tsleil-Waututh Nation is also uncomfortable with the pipeline’s imminent completion. Rueben George, the spokesperson for the nation’s Sacred Trust Initiative, called it “devastating” in comments to the Times Colonist newspaper.

“The snowpack for British Columbia and Alberta is the lowest that it’s ever been. The floods, droughts and fires, all of this is going to get progressively worse, and it’s all directly related to the fossil fuel industry,” he said.

What are the impacts of the Trans Mountain pipeline on endangered species?

The Trans Mountain expansion destroyed key habitat for the endangered spotted owl.

Some parcels of land approved for tree cutting along the pipeline route were in old-growth forests and other habitat federal scientists said was necessary for the spotted owl’s survival.

Last summer, the environmental law charity Ecojustice said it would take the federal government to court, asking the government to issue an emergency order that would protect the spotted owl, something the federal environment minister said at the time he would recommend.

The federal court was asked to weigh in on whether the minister failed to comply with his duties under the Species At Risk Act. That decision is still pending but there is evidence the spotted owl is now extirpated from Canada, meaning it is nationally extinct.

Scientists have also expressed concerns over the impact of the anticipated increase in oil tanker traffic from the expansion project on the endangered Southern Resident killer whales. One issue is the impact of underwater noise that interferes in the whales’ ability to communicate and find food.

That’s one reason why the Tsleil-Waututh Nation has opposed the expansion project. The nation’s territory has already been significantly changed as urbanization and ship traffic have increased over the years.

The federal government has made interim sanctuaries for the whales, as well as mandatory speed restricted zones, requirements for vessels to stay away from the whales in southern B.C. coastal waters, agreements on whale watching bans, voluntary noise reduction, fishery closures to protect whale access to food and stricter limits on ocean pollution. It also said it will be consulting on further changes to rules surrounding how close vessels can get to the whales.

Where will oil from the Trans Mountain pipeline go?

For many years, the pitch from the fossil fuel industry has been that the Trans Mountain expansion project was being built to satisfy an increasingly voracious appetite for fossil fuels from growing Asian economies.

“As countries in Asia Pacific begin to develop the same quality of life we enjoy here in Canada, they need to secure sources of energy,” Trans Mountain argues on its website.

“Canada is a natural trading partner for these countries, and with an expanded Trans Mountain Pipeline system, we will be in a position to provide for their growing needs for years to come.”

Some early evidence of this came in March when Chinese state-owned multinational Sinochem Group bought 550,000 barrels of petroleum from Suncor, one of the first shipments along the new pipeline, according to news reports.

Back in 2022, Russia’s invasion of Ukraine also provided a complicating factor. The war resulted in Western sanctions on Russian crude oil, meaning Russia began supplying Asian markets with cheap crude that would compete with Canadian petroleum, Reuters reported.

As a result, a “disproportionate” amount of the new volumes of petroleum sent down the expanded pipeline could wind up instead on the U.S. West Coast, energy consulting firm Wood Mackenzie told Reuters.

Only certain refineries can process the heavy, sulphur-rich oil that comes out of the oilsands. Some of these are in California and are considered by energy consultants to be prime suspects to process Trans Mountain petroleum — whenever it’s able to get there.

What’s next for the pipeline?

The federal government doesn’t want to be the pipeline’s owner forever. Since 2019, the government has been signalling it wants “Indigenous economic participation” in Trans Mountain.

One group that has previously expressed interest is Calgary-based Project Reconciliation, which has proposed a bond-financing plan it says would result in complete Indigenous ownership of Trans Mountain — with Indigenous decision-making powers and the group acting in an administrative role.

Another is Chinook Pathways, a joint venture between Western Indigenous Pipeline Group and Pembina Pipeline. A third group that has expressed interest is Alberta’s public-sector pension manager, Alberta Investment Management Corp.

Katherine Cuplinskas, a spokesperson for Finance Minister Chrystia Freeland, said in April the government has been speaking with different Indigenous groups about their potential participation, the Globe and Mail reported.

Meanwhile, the pipeline is still in an ongoing dispute over tolls, with oil shippers on the pipeline expansion expressing concerns about cost increases.

This story was updated at 12:18 p.m. Eastern Time on Sept. 26, 2023 to include new information related to the regulator’s decision dated Sept. 25 to approve Trans Mountain’s request to change its pipeline expansion route and construction method.

The story was updated again at 3:08 p.m. ET on May 1, 2024, to include the latest news about the pipeline’s startup date, cost estimates, the Stk’emlúpsemc te Secwépemc Nation title claim case, the spotted owl, Sinochem Group, Indigenous economic participation and the toll dispute.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

The B.C. government is lobbying intently behind the scenes to dissuade the federal cabinet from issuing an emergency order to protect the endangered spotted owl, according to a cabinet minister briefing document obtained by The Narwhal.

The document cites socio-economic impacts and B.C.’s “significant protections” for spotted owls as reasons why Ottawa should back away from issuing a rare emergency order to prevent industrial logging in the owl’s old-growth forest habitat.

The spotted owl has become a symbol of B.C.’s failure to protect imperilled wildlife and the province’s on-going destruction of old-growth forests, where the football-sized bird nests in cavities in large trees and preys mainly on flying squirrels and bushy-tailed woodrats. Only one wild spotted owl remains in the wild in B.C. following decades of clearcutting in its temperate rainforest habitat.

About 30 spotted owls live at a B.C. government-funded breeding centre in Langley, where eggs are hatched in incubators in the hopes of reintroducing the owls into the wild. Last summer, captive-bred owls, outfitted with tiny GPS backpacks, were set free for the first time. One owl was found injured and returned to the breeding centre — “apparently hit by a train,” according to the document — while the other two died over the winter. 

In February, federal Environment and Climate Change Minister Steven Guilbeault said he would recommend cabinet issue a rare emergency order under Canada’s Species At Risk Act to protect the spotted owl’s critical habitat — habitat scientists deem necessary for the survival and recovery of the chocolate-brown bird with creamy white spots. An emergency order would give Ottawa the power to step in and make decisions that normally fall to the provinces, such as whether to issue logging permits in critical habitat. But Guilbeault didn’t make the recommendation; a legal action the environmental law charity Ecojustice launched in June aims to force the minister to follow through. The final emergency order decision rests with the federal cabinet.

“An emergency habitat protection order could increase protection by 120,000 hectares of suitable habitat that occurs throughout the historic range of spotted owl, which will have significant impacts on forest sector jobs and provincial revenue,” states the two-page briefing note prepared for B.C. Minister of Water, Land and Resource Stewardship Nathan Cullen and released through freedom of information legislation. “To date, Canada has never provided compensation for socio-economic impacts of emergency habitat protection orders.”

Why emergency orders are rare for species at risk 

Only twice in the 20-year history of the federal Species At Risk Act has cabinet issued emergency orders: once to protect the western chorus frog in Quebec and once for the greater sage grouse in Saskatchewan and Alberta. 

“While [the Species At Risk Act] forces Minister Guilbeault to recommend the emergency habitat protection order, the federal cabinet can consider other factors, including provincial input …” says the briefing note, dated Feb. 3. Public servants prepared the note for Cullen prior to a meeting with Guilbeault to discuss the federal minister’s determination that spotted owls face imminent threats to their survival and recovery, requiring Guilbeault to take action or run afoul of the Species At Risk Act.

B.C. will need to ensure the federal cabinet “is fully informed of both the socio-economic impact of protecting a further 120,000 hectares and the provincial commitment to recovering spotted owls in B.C.,” the briefing note says. It does not elaborate on socio-economic impacts or place a dollar figure on them. 

B.C. Green Party leader Sonia Furstenau said the province’s efforts to derail a spotted owl emergency protection order parallel its attempt to quash a potential Canada-U.S. inquiry into transboundary water pollution from Teck coal mines in southeast B.C. 

“There’s a pattern here,” Furstenau said in an interview. “This provincial government puts industry interests over the environment [and] ecological habitat protection.”

“We now have an environment minister and a forestry minister and a water, land, and resource stewardship minister, but none of them seem to be oriented to those things. They are there to make it possible for industry to carry on with its activities on the land in B.C. that have created this catastrophe.”

The planet is in the throes of a global mass extinction event, with 1,800 species officially at-risk in B.C., Furstenau pointed out. “And we have a government that has demonstrated very clearly that it is not going to take the kinds of actions necessary to protect the species that are at risk of extinction.”

She said it’s tragic B.C. is “witnessing the end of a species and can’t recognize that it is our policies, our decisions and our actions that need to change.” 

Spotted owls a political hot potato 

The internal provincial briefing note says B.C. has protected more than 281,000 hectares of critical spotted owl habitat in wildlife habitat areas. It fails to mention some wildlife habitat areas are open for clear-cut logging and target shooting. It also doesn’t mention the B.C. government approved two dozen clear-cuts in spotted owl critical habitat, including in a wildlife habitat area, to make way for the federally owned Trans Mountain pipeline, a seemingly contentious issue the province throws back at Ottawa in the briefing note, saying the pipeline was approved “with little or no mitigation for the captive breeding facility.” 

“Trans Mountain has now agreed to mitigate concerns based on guidance from B.C. staff,” the document says. “It was only through B.C.’s insistence and leadership that Trans Mountain has recently agreed to undertake steps to mitigate these risks.” 

Cullen’s ministry declined The Narwhal’s request for a telephone interview with a subject matter expert, saying no one was available. In an emailed response to questions, the ministry said construction of the Trans Mountain pipeline occurred through horizontal drilling under a right-of-way within 40 metres of a spotted owl aviary at the captive breeding facility in Langley. “The construction occurred during the sensitive breeding window,” the ministry wrote, saying the province has repeatedly raised concerns with the federal government about noise disturbance from the project and “related risks to survival and breeding success” at the breeding facility.

Andrea Olive, a University of Toronto political science professor whose research focuses on biodiversity and conservation policy, dismissed the B.C. government’s claim it has protected sufficient habitat for the spotted owl. “If that were true, the spotted owl would not be in the situation it’s in. Obviously, it doesn’t have adequate habitat. That’s why it’s endangered.”

The provincial briefing note also informed Cullen that staff at Environment and Climate Change Canada were preparing a federal cabinet briefing package for the emergency protection order. In advance of the cabinet presentation, the documents say Guilbeault’s ministry would engage with First Nations whose traditional territory overlaps with the historic range of spotted owls; staff from Cullen’s ministry would “support the development of this engagement and will participate in the meetings in order to ensure that provincial expertise is shared.” 

In an emailed response, Samantha Bayard, media spokesperson for Environment and Climate Change Canada, said the federal government is committed to the survival and recovery of the spotted owl. Bayard said the department is working with the B.C. government “to identify additional measures to protect and recover this symbolic species and its old-growth forest habitat” and has initiated consultations with Indigenous Peoples.

“Consistent with his obligations under the Species At Risk Act, the Minister of Environment and Climate Change Canada will make a recommendation in a timely way to the Governor in Council for measures to protect [the] spotted owl from imminent threats,” Bayard wrote. She said the federal government is committed “to acting on sound science and all available information when it makes decisions.” 

In addition to the findings of the imminent threat assessment that formed Guilbeault’s opinion, Bayard said a number of factors may be considered in emergency order decisions. “These include views shared by Indigenous Peoples, socio-economic and legal considerations, views shared by stakeholders and efforts by the government of British Columbia to mitigate imminent threats.”

“Based on actions taken” by the B.C. government, Environment and Climate Change Canada said Guilbeault has determined the species is no longer facing imminent threats to its survival, but that “imminent threats to its recovery remain.” 

Province calls federal Species At Risk Act ‘inflexible’

The Narwhal asked Environment and Climate Change Canada for a list of actions taken by the B.C. government — aside from announcing logging deferral extensions in the Spuzzum Valley, where the last wild spotted owl lives, and a nearby valley that until recently was home to a single male wild spotted owl, who vanished and is presumed dead. “It appears that the province of British Columbia is the lead on this, and they are currently working on a response,” the federal department told The Narwhal in an email. The federal department also sent a copy of this email to the B.C. environment ministry.

B.C.’s environment ministry passed the buck, saying it is not able to speak to the follow-up questions posed to the federal environment ministry. The provincial ministry also sent the federal government a copy of its email to The Narwhal.

The provincial briefing note calls the federal Species At Risk Act “inflexible” and says the Act contains no provisions for a “science-based, adaptive habitat management approach.” 

Olive and Ecojustice lawyer Andhra Azevedo expressed surprise about provincial officials making these statements.

Laws like the Species At Risk Act are meant to be inflexible, Olive said. “If it were too flexible, it wouldn’t protect anything.”

She said recovery strategies mandated under the Species At Risk law are scientific documents, based on western science and Indigenous Knowledge. “It’s science telling us what the species is, what its habitat and distribution is, what its threats are … If science is saying a threat is habitat loss, and we have scientific reason to believe that that’s true, then the government ought to take action to reverse habitat loss.” 

Azevedo pointed out B.C. has no stand-alone legislation to protect species at risk of extinction, despite a 2017 commitment by the BC NDP, the party in power, to pass it. She said conservation groups like the Wilderness Committee, which Ecojustice represents in the emergency order legal action, have no alternative but to turn to the federal legislation. “The Species At Risk Act is all about a science-based approach, at least in terms of many of its first steps.”  

According to the provincial briefing note, B.C. government experts with decades of experience in spotted owl recovery do not recommend additional habitat protections. Instead, the unnamed experts recommend a “science-based, adaptive habitat management approach.” Such an approach, the note said, will ensure habitat protection measures are “adjusted and applied” as more owls are released and “we learn more about where and how released owls disperse and establish territories.”

Olive said she hadn’t heard of the “adaptive habitat management approach.” The Narwhal asked Cullen’s ministry for an explanation and was told, “This science-based approach to identifying critical habitat was intended to adapt over time as new information is gathered. As an example, monitoring of released captive-born owls will be used to determine habitat requirements and test habitat models.” The ministry also said the “adaptive management cycle” supports the inclusion of Indigenous world views and Indigenous Knowledge.  

The ministry said the federal government will complete a socio-economic impact assessment as part of their cabinet package and “B.C. will support with information as requested.”

Azevedo said an emergency order represents one of the last opportunities to try to recover spotted owls in Canada. 

“It is very clearly time for the federal government to step in, under the Species At Risk Act, and do exactly what the emergency order provision is intended to do — take urgent and emergency action to stop [logging] authorizations that are threatening the ability to recover this species … so that hopefully, the species can start to have a stable population in the wild.”

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Joe Foy stands on a dusty logging road overlooking a fresh clearcut in the Chehalis River watershed in southwest B.C. Documenting clearcuts is something Foy does regularly as protected areas campaigner for the Wilderness Committee, a non-profit conservation group. But on this hot, tinder-dry Sunday afternoon in July, Foy is having trouble accessing the newly logged block, which lies within a wildlife habitat area for the endangered spotted owl. 

Someone is firing a gun nearby. Crack. Crack. Crack. Foy ducks behind a thin fringe of bushes and scrubby saplings and launches a small drone. 

Ten minutes earlier, Foy had beeped the horn of his truck as he drove towards the clearcut along a logging road at the edge of a steep slope. But the shots zinged closer and closer. He was forced to turn around, parking a short distance away in a clearing in the wildlife area littered with shiny spent bullets, empty beer cans and bullet-holed metal road signs poking out of a pile of earth.

Foy wants to take photographs and drone footage of three new clearcuts — known as block CH829 — which were recently approved by the B.C. government in the spotted owl wildlife habitat area in the Fraser Valley. Wildlife habitat areas are mapped areas the B.C. government designates to conserve important wildlife habitat, such as forests with trees large enough for the spotted owl to nest and hatch its young or second-growth forests that will become suitable habitat.

An estimated 1,000 adult northern spotted owls once lived in old-growth cedar, Douglas fir and hemlock rainforests in southwest B.C. Following decades of industrial logging, only one spotted owl remains in Canada’s wild, in an undisclosed location in a valley near the Fraser Canyon. About 30 spotted owls live at a B.C. government-funded breeding centre, where staff hatch eggs in incubators and feed the owls euthanized mice and rats in the hopes of releasing captive-born individuals into the wild.

When the breeding centre opened 16 years ago, the B.C. government said it would release juvenile spotted owls to augment the dwindling wild population. The first release took place last summer, when three males hatched at the centre were set free. One suffered an injury and was brought back into captivity and the other two died during the winter. 

In June, the Wilderness Committee launched a lawsuit to try to save spotted owl critical habitat from logging. Foy wants to collect more information to share with the public about the reasons for the lawsuit. But the invisible shooter seemingly won’t allow Foy, clearly visible in a bright orange shirt, to move any closer to the clearcut and now he’s worried they’re trying to hit his drone. 

Crack. Crack. Crack. The shots are louder, closer. Foy curses. It’s like a scene from a Wild West shootout, as the sound of gunfire from multiple shooters in the spotted owl wildlife habitat area echoes off steep canyon walls. They’re not there to hunt but to practise their aim, blasting away at stacked beer cans and other targets. 

“What’s apparent here today is that we need a different agency looking after this landscape,” Foy says as he packs up his drone and retreats up the logging road. “The people that run this landscape need to be fired. This is absolutely bizarre.”

That evening, Foy does some sleuthing. He discovers target shooting in the Chehalis spotted owl wildlife habitat area is perfectly legal. A 2017 change in provincial regulations restricted shooting on the boundaries of the 11,950-hectare habitat area, but not within it. The changes are mapped out on a website called Reliable Gun Vancouver. 

The regulations effectively funnel recreational shooters along a well-travelled logging road easily accessible from a highway, sending them past the restricted areas and into the Chehalis wildlife habitat area, created more than a decade ago. “Not only are we getting the clearcuts, the province has re-directed the target shooters to the areas managed for spotted owl in the Fraser Valley,” says Foy, who has led the Wilderness Committee’s campaign to protect the spotted owl for almost two decades.

Shooters are permitted to fire away to their heart’s content, even though the BC Wildfire Service says target shooting can cause sparks that start wildfires and the province is experiencing the second-worst wildfire season in recorded history. In June, a wildfire with an unknown cause charred 63 hectares in a new clearcut and the surrounding forest in the Chehalis wildlife habitat area, about a two-hour drive east of Vancouver.

It’s also legal to clearcut in some of the wildlife habitat area. Within the wildlife area are logging zones the B.C. government calls “managed future habitat areas” for spotted owls. One fresh clearcut lies in an area that provided suitable foraging habitat for the spotted owl, which preys mainly on flying squirrels and bushy-tailed woodrats. The provincial government agency BC Timber Sales auctioned off the three fresh clearcuts in a block of second-growth forest, while two proposed clearcuts nearby are pending approval. Foy says the government has also approved seven more cutblocks in the wildlife habitat area.

“It’s the logging that really continues to shock me,” Foy says. “And the words. When I go on the provincial site and read the rationale … what the hell? It’s like living in a propaganda world. This is so far from the truth. Logging for ‘future habitat’ for spotted owl? ‘Managing’ these wildlife habitat areas for spotted owl? Are you kidding me?”

Rare federal government emergency order sought to help the spotted owl

The latest spotted owl intrigue comes as Ottawa falls under increasing pressure to protect wildlife after Canada signed a landmark global agreement committing to recover at-risk species and protect biodiversity. More than 5,000 wild species are at some risk of extinction in Canada, with close to 900, including the spotted owl, considered to be critically imperilled. Worldwide, almost one million species face extinction, many within decades, as scientists warn we are in the midst of the sixth mass extinction event. Unlike previous mass extinctions, including one caused by an asteroid striking Earth that wiped out the dinosaurs, human activity is the culprit.

More than 1,800 species are at risk of provincial or global extinction in B.C., the province with the most biodiversity — the greatest variety of species, genes and ecosystems. But despite promises from the BC NDP government, the province still lacks stand-alone endangered species legislation. Spotted owls aren’t protected in B.C., the only place in Canada where they’ve ever been found. So the environmental law charity Ecojustice, acting on behalf of the Wilderness Committee, is hoping to use a tool in the federal Species At Risk Act to save the spotted owl and protect its critical habitat so the species can be reintroduced to the wild.

Under the Species At Risk Act, the federal government can step in to protect an endangered species like the spotted owl if it believes there are imminent threats to its survival and recovery. One tool it can use is an emergency order, which would give Ottawa the power to make decisions about provincial land, such as whether to issue logging permits in spotted owl wildlife habitat areas and other critical habitat for the species.

Such action is rare. Unwilling to irk the provinces, the federal government has only issued emergency orders twice in the 20-year history of the Species At Risk Act: once to protect the greater sage grouse in Alberta and Saskatchewan and once to protect the western chorus frog in Quebec.

Last fall Ecojustice, acting on behalf of the Wilderness Committee, petitioned the federal government to issue an emergency order to protect the spotted owl and its critical habitat. In February, federal Environment and Climate Change Minister Steven Guilbeault, citing imminent threats to the spotted owl’s survival and recovery, said he would recommend cabinet issue the order. Guilbeault determined 2,500 hectares of habitat necessary for the owl’s recovery was at risk of being logged within the year. 

But the order never came. Ecojustice surmised Guilbeault hadn’t made the recommendation to cabinet, whose deliberations are confidential. “As far as we know, there’s been no recommendation,” Ecojustice lawyer Andhra Azevedo told The Narwhal.

In June, Ecojustice, acting on behalf of Wilderness Committee, announced it is taking the federal government to court to force Guilbeault to recommend that cabinet issue the emergency order. Given the acute situation, Ecojustice requested an expedited timeline for a hearing. Canada agreed, and the hearing could be held as early as August. “We can try and make sure that any action taken to recover the spotted owl is actually being taken with the urgency that is required,” Azevedo says.

The lawsuit comes after the B.C. government scuttled a federal plan to designate large swaths of core critical habitat for the spotted owl, easing the way for imminent old-growth logging in areas such as the Teapot Valley, where the Wilderness Committee found flagging tape demarcating planned new clearcuts and a planned logging road.

Almost 50 per cent of the owl’s core critical habitat — habitat that federal biologists deemed necessary for survival and recovery — was quietly removed from federal maps between 2021 and 2023 following negotiations with the province, The Narwhal learned earlier this year through a freedom of information request. The maps were included in a long overdue “amended recovery strategy” for the spotted owl, released in January for public comment and not yet finalized. The Chehalis spotted owl wildlife habitat area remained on the maps as core critical habitat. 

Complicating matters, the federal government is also responsible for the destruction of habitat scientists say is necessary for the spotted owl’s survival and recovery. The federally owned Trans Mountain pipeline cut through a spotted owl wildlife habitat area near Hope; the B.C. government approved two dozen new cutblocks for the pipeline in spotted owl habitat.

In an emailed response to questions, Environment and Climate Change Canada media spokesperson Samantha Bayard said the government is aware of the Ecojustice application and is not in a position to comment on the case while the matter is before the courts. Bayard said the federal government can’t comment on shooting in the Chehalis spotted owl wildlife habitat area because it falls under provincial jurisdiction.

The Narwhal asked to interview someone in the B.C. Ministry of Water, Land and Resource Stewardship but the request was not approved. The B.C. government said it was working on an emailed statement instead, but The Narwhal did not receive a response prior to publication.

“Right now, under the Species At Risk Act, the spotted owl is deemed to be recoverable,” Foy says. “We have a [federal] minister saying if this kind of logging in critical habitat continues, it puts the recovery in danger. That is a very powerful statement.”

Is B.C. doing ‘everything’ it can for spotted owls? 

After Foy leaves the area where the shooter blocks his access to the clearcut, he drives along a logging road spur to a wildlife habitat area cutblock, proposed by BC Timber Sales, that awaits approval. Trees that will become suitable nesting habitat for the spotted owl within decades are marked with orange spray paint — it’s not clear if they will be logged or left standing as solitary figures in a future clearcut — while yellow flagging tape wraps around culturally modified cedars, whose bark was stripped by First Nations for clothing and other necessities.

The largest trees in the planned cutblock could be about 80-years-old, according to Foy: pipsqueaks compared to the ancient cedar and Douglas fir trees found in the canyons before European settlement and industrial logging. The forest proposed for the chopping block is shady and cool. Moss clings to tree branches and ferns and salal unfurl a green carpet over the uneven ground. If left alone, Foy says the forest will provide suitable habitat for the spotted owl in about 40 years. 

To Foy, the Chehalis wildlife habitat area reflects the federal vision for the spotted owl — to connect the scattered remnants of old-growth rainforests with younger forests that will become suitable habitat in a few decades, helping juvenile owls to safely disperse. “What the federal plan seeks to do is to start to heal the highly fragmented aspect of this forest,” he says. “And what the province has done is continue to issue permits to further fragment it.” 

In a May news release about the death of the two released spotted owls, B.C. Minister of Water, Land and Resource Stewardship Nathan Cullen said the provincial government and its partners are “doing everything we can” to help spotted owls recover. “The loss of these two spotted owls is certainly unfortunate, and it will help us learn more about raising and releasing spotted owls and how to guide the recovery of this species,” Cullen stated. “We remain confident in our overall approach and optimistic that we’ll see more positive results in the years to come.” 

Foy doesn’t share the minister’s confidence. He scoffs at the B.C. government’s repeated claim it has set aside enough habitat for 250 spotted owls, pointing to the owl’s demise as proof it is insufficient. “In this landscape, logging has already gone way too far.” 

The gunfire starts up again, sounding like nearby fireworks — crack-crack-crack, crack-crack-crack — and Foy is momentarily distracted. Then he poses a question about the B.C. government’s untested plan to hatch spotted owls and release them into small, fragmented pockets of remaining old-growth forest. At the same time, he points out, the government continues to sanction clear cutting in the Chehalis wildlife habitat area and other core critical habitat for the species: “Is the only hope for these creatures some kind of weird game farm situation?” 

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

An executive at the federally owned Trans Mountain corporation gave TD Bank a heads up that the government would obscure the financial institution’s involvement in a multibillion dollar bailout for the struggling oil pipeline, according to an email obtained by The Narwhal.

Trans Mountain chief financial officer Mark Maki gave the assurance to six people working for Toronto-Dominion Bank’s investment banking arm, TD Securities, in the May 2022 email obtained under access to information law.

Maki opened his message to the six bankers by amicably greeting them as the “TD crew.” He also sent them an advance copy of Finance Canada’s news release about the government’s latest effort to support the construction of the pipeline’s expansion project.

The email provides a glimpse at private conversations between the federal government and Canada’s big banks in the lead-up to Ottawa’s decision to support a $10 billion loan to Trans Mountain from a financial syndicate. The federal government’s support came in the form of a loan guarantee — meaning the public would assume the loan’s financial risk. It also provides a stark example of how the government offered to protect bankers from criticism about their involvement in the controversial pipeline expansion.

“TD crew, the Government of Canada will be issuing a news release shortly to deal with inbound requests with respect to the status of [Trans Mountain corporation] financing,” Maki, who spent three decades at rival pipeline company Enbridge, told the bankers.

“Please note no specific callout of the syndicate members.”

Government defends decision to obscure banks behind Trans Mountain loan

The government decided to offer the loan guarantee in the wake of Finance Minister Chrystia Freeland ruling out any further direct public funding for the pipeline’s expansion, leaving private lending as the main alternative.

Canada Development Investment Corporation, the Crown corporation that owns the pipeline and reports to Parliament through Freeland, said in its 2021 annual report that the pipeline would require “necessary external financing” or else it couldn’t complete the construction project.

But the loan guarantee was put in place despite the fact that the cost of completing the pipeline’s expansion had swelled to $21 billion from an initial cost estimate of $7.4 billion. (The cost has since grown further to more than $30 billion as of March 2023.)

In backing the loan, the government also put taxpayers on the hook in the event the expansion project is cancelled, according to a financial report from the Crown corporation.

Despite the uncertainty involved in placing the risks of a $10 billion financing deal for a project plagued with cost overruns into the public’s hands, Ottawa’s conversations with the banks were carried out behind closed doors.

Even after Finance Canada revealed details of the loan in a public announcement, the department left out TD’s name, and the names of the syndicate’s other members. A CBC News report from the time, for example, noted “the statement didn’t say which institutions are funding the pipeline’s completion.”

Trans Mountain and Finance Canada have defended their decision not to be proactive about telling Canadians how the banks were involved in the $10 billion deal. The pipeline company and federal department argue the information was already available for people with a subscription to financial data services.

“When this news release was issued, information about the lenders was already public,” a spokesperson for Finance Canada said. “The transaction was disclosed through data services like Bloomberg and Refinitiv.”

The Bloomberg Terminal is a popular financial data service, costing around US$24,000 per year to access. Refinitiv Eikon is a competitor, and costs around US$22,000. Other data services can come cheaper, but most require paid subscriptions of some sort to access, although they may have free trials.

Asked why TD was given a heads up about not being named in the government’s announcement, a spokesperson for Trans Mountain called it a “courtesy.”

The email from Maki and a copy of Finance Canada’s announcement were the only documents released to The Narwhal after requesting all correspondence between Trans Mountain and the department, concerning the loan guarantee. The Narwhal could not confirm whether other banks were notified prior to the news release being published.

‘Finance Canada is lying,’ says Stand.earth’s climate finance director

Environmental advocacy group Stand.earth accessed the financial data from the Bloomberg Terminal in May 2022.

They discovered that the syndicate backing the pipeline was comprised of TD, along with all of Canada’s other “big five” banks — Bank of Montreal (BMO), Bank of Nova Scotia (Scotiabank), Canadian Imperial Bank of Commerce (CIBC) and Royal Bank of Canada (RBC) — as well as National Bank of Canada.

Due to the significant price tag for access, the data the group obtained should not be understood to have been publicly available, the group’s climate finance director Richard Brooks said in an interview.

“Finance Canada is lying, you can quote me on that. They’re lying, it wasn’t public,” he said.

Because the government owns the pipeline, conversations and negotiations about securing private financing “should have been in the public sphere and not behind closed doors,” Brooks argued.

The fact that TD Bank was offered an advance copy of the news release from Finance Canada, he added, also raises questions about government accountability.

“Our government should be accountable to us Canadians, not to the bank,” Brooks said. “This is part of the reason why we can’t leave it to our Canadian banks to [scale back] their activities when it comes to fossil fuel financing.”

The Canadian Bankers Association, an industry group that represents TD Bank and Canada’s other big banks, said it would decline to comment on Maki’s email.

Four spokespeople for TD Bank did not return requests for comment from The Narwhal.

Secrecy surrounding TD highlights ‘obvious contradiction’ for big bank: expert

There is an “obvious contradiction” in the role that TD Bank has played when it comes to Trans Mountain, argued independent economist Robyn Allan, a former president of the Insurance Corporation of British Columbia and a prominent critic of the pipeline expansion project.

Trans Mountain’s expansion will nearly triple the pipeline’s capacity to 890,000 barrels per day of crude oil and other petroleum products flowing from near Edmonton to a Vancouver-area marine terminal. In 2015, Allan withdrew her status as an intervenor in the federal energy regulator’s review of the expansion project, accusing the regulator of ignoring issues like the impact of increased carbon pollution from the oilpatch that the pipeline would facilitate.

The contradiction with TD comes from its dual role as financial advisor and lender, Allan said.

As a financial advisor, TD Securities, along with BMO Capital Markets, found in early 2022 the project was still “commercially viable” despite cost estimates that were already elevated at the time, according to a Finance Canada statement issued three months before Maki’s email.

Yet as a lender, the bank’s participation in the syndicated loan to Trans Mountain came with a government guarantee, “as if the project is too risky — as if it is not commercially viable,” Allan said.

“None of the information regarding TD’s financial viability analysis has been made public, so it is not possible to check the veracity of TD’s financial viability claim,” she said.

Adding to this contradiction is the fact the government felt the need to hide TD’s involvement in the syndicated loan, Allan said. “This behaviour raises red flags as to what [else] TD and the Government of Canada are trying to hide,” she said.

TD’s public connection with Trans Mountain dates back to before Prime Minister Justin Trudeau’s Liberal government bought the pipeline and its expansion project from Texas energy company Kinder Morgan in 2018.

In 2017, the bank acted as a lead underwriter for a $1.7 billion initial public offering for Kinder Morgan Canada Limited, and in 2018 it helped finance Canada’s $4.7 billion purchase of the pipeline. That same year, TD Securities also wrote the opinion that the government’s offer at the time was fair.

Now, with costs continuing to rise, other financial analyses, such as that from the Parliamentary Budget Officer, have questioned the ability of Trans Mountain to cover its debts. Allan herself concluded in an October 2022 report for West Coast Environmental Law that the tolls shippers on the pipeline will pay once the expansion project is operational, have not kept pace with the construction costs.

Meanwhile, the project continues to face “numerous technically challenging construction activities,” like groundwater leaching into mountain drilling areas and problems sourcing specialty cement for a tunnel, according to the Crown corporation. This “adds uncertainty in costs and schedule” to the predicted timeline of completion by 2023, it said.

The pipeline has also faced controversy over inadequate consultations with Indigenous communities, including a Federal Court of Appeal decision in 2018 that said Canada failed to meaningfully consult with Indigenous Peoples about the expansion project, quashing Trudeau’s original approval of it.

The Tsleil-Waututh Nation, which argued in that case that Canada failed in its duty to consult, wrote a letter to TD Bank’s CEO Bharat Masrani in March 2022, warning the bank against considering any financing for Trans Mountain’s expansion plans, in light of the risks from climate change and infringing human rights.

New $13 billion Trans Mountain loan still may not be enough, Crown corporation says

Cabinet approved the $10 billion loan guarantee on April 29, 2022. Maki sent his message a couple weeks later to four people in the Calgary office of TD Securities who work in global energy, loan syndications and corporate credit, according to their LinkedIn profiles, and two more at the bank’s Toronto office.

He copied a lawyer and a vice-president for Trans Mountain, an executive at the Crown corporation and two officials at Finance Canada — a director of corporate finance and a senior advisor to the deputy minister.

The $10 billion in financing was structured as a revolving credit facility, which is sort of like a credit card, where the borrower can make withdrawals, repay and then make further withdrawals.

By the end of 2022, the pipeline company had withdrawn $7.2 billion from it, according to Canada Development Investment Corporation’s 2023 to 2027 corporate plan summary.

In exchange for the federal government’s guarantee of the loan, the company paid a fee. At the end of 2022 it had racked up $36.8 million in guarantee fees, according to the corporate plan.

The $10 billion deal had a one-year term. In May 2023, Trans Mountain secured a new financing deal, one with a two-year term and a higher borrowing limit of $13 billion, the corporate plan shows.

Stand.earth, the environmental advocacy group, obtained financial data in May that confirmed this new arrangement. The data shows all of Canada’s “big five” banks are again involved, as well as National Bank.

As of December 2022, Trans Mountain corporation was $23.3 billion in debt. In the four and a half years between the time the pipeline was bought by the government and the end of 2022, the pipeline company has sunk “over $18 billion” into the expansion project, the corporate plan confirmed.

Even so, Trans Mountain says it still needs more money.

The Crown corporation’s plan says an additional $3 to $5 billion of funding “will be required and has not been fully identified.” In the event that it can’t secure this funding, the Crown corporation said construction of the pipeline expansion would need to be halted, and workers laid off.

If the expansion project was cancelled, it said, “borrowings outstanding under the [loan] would have the government guarantee triggered.”

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

The young orca swims just below the surface, cresting briefly before rolling under water and darting left, propelled by her powerful tail. It’s only for a moment, and then she’s back at her mother’s side.

J59, as she’s known, was likely born sometime in late February, the first southern resident killer whale calf born into J pod since September 2020, according to the Center for Whale Research. She’s a beacon of hope for the critically endangered orcas.

It was her playful rolls, captured on video by drone in late May, that allowed researchers at the center to ascertain her sex — news that’s rippled through West Coast communities like the waves set in motion by the calf’s movements.

While one calf alone won’t save the southern resident population, its birth is still cause for celebration. That she’s a girl stirred hope that J59 will one day have calves of her own. 

But in the years that separate that day from this one, J59 will have to overcome numerous challenges, from too little food to noisy, contaminated waters.

As of December, the Center for Whale Research’s most recent census, the population of southern residents stood at 73, split across three pods: J, K and L. 

“We should be seeing about six or seven new calves every year, but we’re just not,” said Deborah Giles, the science and research director of the non-profit Wild Orca.

Almost 70 per cent of the southern residents that do become pregnant miscarry or lose their calves soon after they’re born — losses that take both a physical and emotional toll, she said.

It was only a few years ago that the world watched as a mother orca from J59’s pod — known as Tahlequah or J35 — carried the body of her dead calf for 17 days in a heartbreaking display of grief.

“That whale was telling us that things are terribly wrong with the environment,” Sisi-ya-ama (Leah George-Wilson), former chief of the Tsleil-Waututh Nation, said in an interview.

“Now with a calf being born, I think it’s a sign of hope, hope and healing,” she said.

But with the southern residents still under threat, Tahlequah’s message can’t be forgotten.

Increased ship traffic from Trans Mountain pipeline a risk to southern resident killer whales

In Tsleil-Waututh territory, Sisi-ya-ama pointed to the Burrard Inlet, where urbanization, ship traffic and pollution have dramatically altered the ecosystem.

“It impacts not only the whales, but impacts Tsleil-Waututh and the way that we are able to interact with the inlet,” she said.

“In our culture, whales are significant. They’re messengers, as well as reminders of our ancestors,” she said. “[They] have shown up in the inlet when someone significant in our community passes away and our old people have said it’s them coming to let us know, but also to help our loved one make the transition to the next world.”

The risks to the southern residents is one of the key reasons why Tsleil-Waututh Nation is opposed to the Trans Mountain pipeline expansion project, which would see a significant increase in the number of tankers travelling through the inlet to the expanded Westridge Marine Terminal.

Underwater noise is a major concern for the southern residents because it interferes with their ability to communicate and find food through echolocation.

Think of it this way: “If you came to my home, I’d make you a meal. If it was too noisy, I’d send my children out to play. If you wanted to rest, I’d let you rest,” Shulqwilum (Ray Harris), a fisherman and former chief of Stz’uminus First Nation, said in an interview.

But these days, the southern residents struggle to find the comfort of quiet waters and a decent meal in their home territory. And, while the federal government has created interim sanctuaries for the orcas, Shulqwilum said they need more than the little space that’s been set aside.

Shulqwilum was “overjoyed” when he saw the images of J59 on television. Any new calf, regardless of sex, is “precious,” he said. “She was jumping and playing around like a baby would.” 

But he warned, “we’re on a losing track with the whales in terms of the way things are going.”

For the last several years, the Vancouver Fraser Port Authority has run a voluntary vessel slowdown program that has helped reduce the intensity of underwater noise in key foraging areas, according to a federal government background document on measures to protect the southern residents.

New seasonal slowdown measures are also being implemented this year near Swiftsure Bank, off the southwest coast of Vancouver Island.

While new voluntary slowdown areas may offer some degree of relief, noise is just one of myriad threats J59 and the southern residents are facing.

‘We’ve got an ecosystem that’s out of balance’

One of the more pressing challenges is the decline in the southern residents’ primary source of food: Chinook salmon.

From the Central Valley and, farther north, the Klamath River in California, to the Skagit River in Washington State and the Fraser River in B.C., many wild Chinook populations are struggling, said Sm’hayetsk (Teresa Ryan), a long-time member of the Pacific Salmon Commission’s Joint Chinook Technical Committee and First Nations Caucus.

To help protect the killer whales’ access to Chinook, the federal government has said it will close more areas in key foraging habitat to recreational and commercial salmon fisheries, including at the mouth of the Fraser River.

But it’s not just fishing pressure that’s causing the decline in Chinook. Massive wildfires, pine beetle infestations, logging practices and climate change impacts are being felt throughout entire watersheds, Sm’hayetsk, who is also an Indigenous knowledge and natural science lecturer at the University of British Columbia, said.

“Those are catastrophic impacts to these forests that change the way that water moves through the watersheds and so that affects the rivers that, of course, impact Chinook survival as well,” she said.

“I think we need to spend some more time understanding that what we do in the forest up in the interior has an impact on the southern resident killer whales’ ability to survive.”

The juvenile Chinook that do make it to the Salish Sea are being eaten in large numbers by seals and sea lions. “We’ve got an ecosystem that’s out of balance,” Sm’hayetsk, of the Tsm’syen Nation, said.

If J59 one day has calves of her own, she will have to “train her babies how to hunt for Chinook,” Sm’hayetsk said. But, “it’s difficult for her to be taught if her mother doesn’t have a food source, right, so how is she going to learn that if there isn’t any Chinook?”

“If the killer whales can’t survive here, then there’s a good chance that other things can’t survive as well.”

Alongside the decline in Chinook numbers, there’s been a marked decline in the size of fish all along the coast, Sm’hayetsk said.

“One of the things that Indigenous fisheries used to do is allow the largest fish to go up to spawning grounds,” she said. These larger fish were known to spawn larger offspring.

Other stewardship practices involved caring for the estuaries where juvenile salmon rear, or grow, and taking care of other fish species, such as herring and oolichan, that become food for adult Chinook in the ocean, she said.

For the orcas, the lack of food only worsens the impact of other threats.

Toxic chemicals that build up through the food chain, for instance, may stay locked in a their fat until they’re hungry enough to burn it off, Giles, of Orca Wild, said.

When starvation sets in, the orca will start to metabolize its fat stores, releasing those synthetic toxins and putting them at greater risk for disease, she said.

A pooping killer whale is a happy killer whale

Giles, who is also a killer whale researcher at the University of Washington’s Center for Conservation Biology, was on the water trailing J pod at the end of May, collecting fecal samples to analyze the whales’ nutrition levels and toxicant loads.

“If you have a pooping whale, you have a whale that’s been eating, and so that’s been really fantastic to see,” she said.

Giles also caught a glimpse of J59.

“That new calf is very rambunctious, it breaches quite a lot, like repeatedly breaching, which is really, of course, fun to see and shows that she has enough energy to do that,” she said.

The hope now is that J59 will be able to maintain that energy, that playful spirit. 

Further protection for southern residents, their habitat and food sources, could have a big impact on J59 and her pod’s future, Giles said. But that doesn’t rest solely on the initiative of politicians.

“People, I think, discount the power of their own voice when talking to their elected officials, but it really shouldn’t be devalued,” she said.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

Canada’s financial watchdog says the federal government is “very unlikely” to recoup its $4.5-billion investment in the Trans Mountain pipeline now that the project’s costs have soared by 70 per cent.

On Feb. 18, Trans Mountain Corporation announced the projected cost of the pipeline expansion has risen from $12.6 billion to $21.4 billion. The news release said the COVID-19 pandemic and last year’s floods in B.C.’s Hope, Coquihalla and Fraser Valley areas contributed to increased costs.

Last week, the NDP’s environment and climate change critic Laurel Collins wrote to Canada’s Parliamentary Budget Officer (PBO) Yves Giroux requesting an updated cost analysis of the pipeline and expansion project.

“It is crucial that we hear from the PBO again to lay out clearly what a boondoggle this project is,” Collins told Canada’s National Observer.

Even before costs jumped, the project already walked a fine line between profitable and unprofitable, according to a 2020 analysis by the PBO.

Based on the previous cost estimate of $12.6 billion, a startup date of Dec. 31, 2022, and several other factors, the pipeline and expansion project’s net value was $600 million. Now, the completion date has been pushed back to somewhere between July and September 2023, and Giroux told National Observer he is “not hopeful that there will be any profits to be made from that pipeline, at least for the federal government.”

Based on his previous analysis, if construction costs increased by even 10 per cent to $13.9 billion, the project’s present net value would be an $800-million deficit.

“Now that we’re talking about over $20 billion in construction costs, it is clearly non-profitable,” said Giroux.

“It will probably mean losses for Canadian taxpayers whenever the government decides to sell the pipeline to a private-sector entity,” he said, adding this loss is the most likely outcome unless some of his key assumptions change.

For example, if the cost oil producers are charged to use the pipeline “increases dramatically,” the project could come closer to breaking even, but “the long-term contracts that are used for the majority of the capacity of the pipeline do not suggest this will be a possibility in the near future,” he said.

Giroux said from a financial perspective, killing TMX right now would be the worst outcome because it would mean bearing the cost of the money spent so far and forgoing additional revenues from the expansion.

When the cost increase was announced, Finance Minister Chrystia Freeland said no more public funds will go to the Trans Mountain Corporation and that the Crown corporation that owns the massive oil pipeline will need to secure third-party funding through banks or public debt markets to complete the project. She said the project is “in the national interest and will make Canada and the Canadian economy more sovereign and more resilient.”

Steven Guilbeault says climate action not tied to TMX revenues

Because the pipeline will generate cash flow for decades, it will be able to finance itself on the private market by borrowing from institutional investors, banks or corporations, but the operator will have to borrow at higher rates, so the cost of financing will likely rise, said Giroux.

Former federal environment minister Jonathan Wilkinson, now the natural resources minister, previously told CBC last August that Canada needed to maximize profits from the Trans Mountain expansion in order to fund climate action and achieve net-zero emissions by 2050.

But Steven Guilbeault, who is now the environment minister, suggested Canada would no longer need these revenues.

“If the only thing we did to fight climate change is use the profit of the sales of the pipeline to invest in cleantech or climate-friendly technologies, I’d be worried. But it’s not,” Guilbeault, referring to measures such as methane regulations, carbon pricing, dedicated funding for bike and pedestrian infrastructure and investments in zero-emissions vehicles and chargers.

“What we need to do … going forward (is) reduce more and more our dependency on fossil fuels,” he said. “Does it mean that there will be absolutely no more projects ever built in Canada? That’s not what we’re saying. What we’re saying is that we need to do less and less of those and more and more of the things that will help us reduce our emissions — like cleantech, like transit, like electrification, like renewables.”

According to the Canadian Development and Investment Corporation’s most recent interim report, the federal government has already borrowed and invested well over $14 billion in the project, including the original purchase. The Trans Mountain Corporation will have to secure upwards of $10 billion in funding to meet the revised project cost of $21.4 billion.

Freeland’s office did not respond to National Observer’s request for comment by deadline.

Eugene Kung, a staff lawyer with West Coast Environmental Law, says Freeland’s promise of no more public funds for the project is “a bit of smoke and mirrors” because any debt incurred by a Crown corporation is public debt.

“It’s deceiving to leave the impression that this is not going to cost the Canadian public more, because it will,” he said.

The existing 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. The expansion project will essentially twin the existing pipeline, raising daily output to 890,000 barrels.

Ever since the purchase of TMX in 2018, the federal government has justified its decision by saying “every dollar” earned from the pipeline “will be invested in Canada’s clean energy transition.”

Collins said that claim was dubious at best from the get-go given the PBO’s financial assessments of the project and the urgent need to get off fossil fuels and reduce emissions.

Although the cost jump makes clear the federal government won’t reap any great benefits from selling TMX, Giroux said his assessments can’t account for broader impacts like better prices for Canadian oil, which he says could potentially lead to higher taxes for producers and more jobs in the oil sector.

A central rationale of the project is that the expansion would allow Canada to get a fair price for its oil in Asian markets. This claim was challenged by a 2020 study from the Canadian Centre for Policy Alternatives that found Canadian producers would be taking a loss of US$4 to $6 per barrel if they sold to Asian refineries through TMX compared to selling to U.S. refineries.

Just like the broader economic impacts of the pipeline are hard to calculate, so are the costs of climate change.

A new IPCC report warns humanity is entering an era of irreversible breakdown unless there’s immediate large-scale action to reduce emissions and lays bare the severe costs of climate change for vulnerable communities across the world. More serious climate impacts — like the disastrous wildfires, flooding and heat waves that marked the summer and fall of 2021 — are just a preview of what is to come, according to the report.

Collins said the NDP is calling on the federal government to abandon the TMX pipeline, calling it an “economic and environmental disaster.”

“The people who pay the cost of this are Canadians, it’s our communities,” the Victoria MP said. “The cost is borne both in terms of the dollar spent, but also the cost when it comes to flooding, extreme heat, the impacts on our food systems and the future for our children and our grandchildren.”

Giroux said his office will do a cost analysis “probably in the course of this year” when more detailed financial information becomes available, adding it can’t be done in the immediate future because their work plan is “already quite full.”

— With files from The Canadian Press

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.