The estimated cost of the Coastal GasLink pipeline has increased by 29 per cent to $14.5 billion, as the company behind the project continues to be dogged by unexpected construction issues and rising labour costs.
Calgary-based TC Energy Corp. released the new price tag Feb. 1, up from an earlier estimate of $11.2 billion, for the project.
The $11.2-billion figure, announced by the company last July, was itself a significant increase from an earlier cost projection of $6.6 billion.
91裸聊视频淲e are disappointed with the increase in the Coastal GasLink Project costs,91裸聊视频� TC Energy chief executive Fran莽ois Poirier said in a release.
91裸聊视频淲e continue to be laser-focused on safely completing this critical piece of energy infrastructure at the lowest possible cost.91裸聊视频�
The Coastal GasLink project is a 670-km pipeline spanning northern British Columbia. It will carry natural gas across the province to the LNG Canada processing and export facility in Kitimat, B.C.
Construction of the pipeline is 83 per cent complete and TC Energy hopes to complete the project by the end of this year. However, the company warned Wednesday that if construction extends into well into 2024, it could add up to an additional $1.2 billion to the project91裸聊视频檚 cost.
TC Energy 91裸聊视频� which warned at its investor day in November that it was anticipating a material increase in the cost of the project 91裸聊视频� said it has run into a host of problems including a shortage of skilled labour; contractor underperformance and disputes; as well as other unexpected events like drought conditions and erosion and sediment control challenges.
While the company said it is pursuing potential recoveries from contractors to offset a portion of the rising costs, it will recognize an impairment to its equity investment in Coastal GasLink in its fourth-quarter 2022 financial results.
TC Energy said its overall 2023 capital expenditure outlook has been revised to approximately $11.5 to $12.0 billion, reflecting the deferral of certain project spending, expected cost-saving initiatives and incremental funding requirements associated with Coastal GasLink.
In an emailed statement, LNG Canada said it continues to monitor Coastal GasLink91裸聊视频檚 cost and schedule developments.
91裸聊视频淲hile we cannot disclose specifics, a commercial agreement is in place that addresses risk allocation,91裸聊视频� the statement said.
LNG Canada is a joint venture between Shell plc, Petronas, PetroChina, Mitsubishi and the Korea Gas Corporation. Its Kitimat LNG export facility is more than 70 per cent complete, and the project partners have said they want to deliver its first LNG shipment to global export markets by mid-decade.
The Coastal GasLink pipeline is not the only major energy infrastructure project in Canada to be plagued by cost overruns. Last February, the Crown corporation behind the Trans Mountain pipeline expansion project 91裸聊视频� which will increase oil transportation capacity from Alberta to the West Coast 91裸聊视频� announced the new cost of the project was an estimated $21.4 billion, up from an earlier estimate of $12.6 billion.
Trans Mountain Corp. blamed the surging cost projections on the COVID-19 pandemic and the effects of the November 2021 flooding in B.C., as well as project enhancements, increased security costs, route changes to avoid culturally and environmentally sensitive areas, and scheduling pressures related to permitting processes and construction challenges in difficult terrain.
Budget overruns at both pipelines have provided fodder for environmental groups, who believe companies should be investing in green energy instead of traditional fossil fuels.
91裸聊视频� Amanda Stephenson, The Canadian Press
RELATED: $213K fine issued to Coastal GasLink pipeline for environmental breach in northwest B.C.
