Canada's Trans Mountain restarts work on contentious pipeline expansion

CALGARY, Alberta (Reuters) - Trans Mountain Corp said on Wednesday it is restarting construction on parts of its pipeline to nearly triple the flow of crude from Alberta’s oil sands to the British Columbia coast, a year after the project’s latest regulatory setback.

FILE PHOTO: The Westridge Marine Terminal, the terminus of the Trans Mountain Pipeline, is seen in an aerial photo over Burrard Inlet in Burnaby, British Columbia, Canada June 29, 2019. Picture taken June 29, 2019. REUTERS/Jason Redmond/File Photo

The Trans Mountain pipeline, which the Canadian government bought last year to help ensure the completion of the expansion to 890,000 barrels of oil per day after years of delay, is fiercely opposed by environmental and some indigenous groups.

Last year a Canadian court overturned the federal government’s 2016 approval of the project on the grounds it had failed to adequately consult indigenous groups. After a new regulatory review, Justin Trudeau’s Liberal government reapproved the pipeline in June, to the relief of Canada’s oil industry.

News that construction is resuming could be a boon to Trudeau’s government, which faces a national election in October.

Officials will point to progress on the long-delayed project as a sign of Ottawa’s support for the Canadian energy sector at a time when critics accuse the government of undermining the oil patch through carbon pricing and new laws on environmental assessment for major projects.

“We are very happy that people will be in the field, digging the ground and installing the pipe,” Canada’s Minister of Natural Resource Amarjeet Sohi said at a news conference in Edmonton, where the pipeline starts. “It’s a very exciting time for Canada.”

The company has issued notices to some contractors to mobilize construction equipment and crews, said Trans Mountain Chief Executive Ian Anderson said in a statement.

Work is restarting at the Burnaby storage terminal where the pipeline terminates, and the Westridge marine terminal, where crude is loaded onto tankers. It will also soon begin in communities along the pipeline’s right-of-way in Alberta between Edmonton and Edson, and in the Greater Edmonton area.

Approximately 4,200 workers are expected to be employed along the pipeline corridor in the fourth quarter of 2019.

“Clearly this project has been subjected to numerous delays and setbacks over the past several years. With today’s announcement on the commencement of construction, I firmly believe that we are finally able to start delivering the significant national and regional benefits we have always committed to,” Anderson said.

Canada is the world’s fourth-largest crude producer but the energy sector has struggled to get new export pipelines built, leading to deep discounts on crude and an exodus of foreign investors from the oil sands.

The Alberta government on Tuesday extended production curtailments imposed to help relieve congestion on export pipelines.

Premier Jason Kenney welcomed news of Trans Mountain construction restarting but said there was still no reason to celebrate.

“The series of delays and the existing uncertainty around this vital project continue to present serious challenges,” Kenney said in a statement.

The government of British Columbia is opposed to the expansion, although it has said it will not delay issuing building permits, and a number of protesters have vowed to blockade construction.

Trans Mountain expects to receive all outstanding regulatory approvals and permits in remaining construction areas over the coming months and said if those approvals go to plan the project will be in service by mid-2022.

“The sooner this project is completed, the better for all of Canada,” the Canadian Energy Pipeline Association said in a statement.

Reporting by Nia Williams; Editing by Steve Orlofsky and Marguerita Choy