RE:RE:Wow, talk about cost escalationObscure1 wrote: ENB built its similar length Line 3 pipeline through multiple Provinces and States over 6 years under intense opposition. ENB's final cost was $9.3 billion despite the fact that construction was undertaken in the dead of winter in Minnesota and completed during the pandemic.
In 2017, the year before Trudeau bought TMX from KMI, ENB's cost estimate for it's Line 3 upgrade was $8.2 billion. That means all the delays, Covid, and winter construction only increased ENB's cost of building Line 3 by 13%.
Now that theTMX is estimated to cost $21.4 billion, Trudeau has cut off federal funding and the completion date has been pushed back another 9 months. That means equity partners will be brought in who will walk away with sweet heart deals.
Thanks Justin
To put this cost into perspective, the average cost of building a pipeline of that diameter is about 3.5 million per kilometre. The new TMX numbers is FIVE TIMES that figure.
Trudeau is effectively walking away from the project and tax payers will be eating the billions spent on it so far.
With the cost at about FIVE TIMES the normal cost, the regulated tariffs needed for the owners of the pipeline do not make any sense and in effect renders the whole project uneconomic. If anyone steps up to the plate to put money into this project and take it over, they will require significant annual subsidies to offset the difference between a normal tariff and what is needed for the pipeline and if this happens taxpayers will be on the hook for this pipeline for decades to come.
Seems to me that with the new cost estimates, this pipeline is for all intents and purposes is dead in the water and when you combine that with Biden's decision regarding KXL, the Alberta oil industry is in a big hole.