Greenhouse gas emission rule to add millions to Trans Mountain cost: Kinder Morgan

It will cost millions of dollars more to build the Trans Mountain expansion because of an unprecedented requirement to offset greenhouse gas emissions from pipeline construction, the project's proponent says.

But Ian Anderson, president of Kinder Morgan Canada, said Thursday he has no objections to the unexpected provision because it gives the company a chance to reduce its environmental footprint.

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"It was new to us, we hadn't seen that in draft form (but) we welcome it," Anderson said in one of his first interviews since the $6.8-billion project was given the National Energy Board's conditional blessing last week.

"It will add cost.Those offsets will cost something. I don't know what that will be yet."

As part of its conditional approval, the federal regulator said Kinder Morgan would have to account for the greenhouse gas emissions that would arise from building the expanded pipeline and present a plan on how it would bring the net impact of those emissions to nil.

That would have to be done within four months of the expanded pipeline beginning operations.

Provisions could have future application

Alan Ross, a partner with Calgary law firm Borden Ladner Gervais who specializes in energy regulation, said the new NEB provisions could be included in other future pipeline decisions where appropriate.

"If it remains unchallenged on appeal or if the federal government ultimately approves this decision with that requirement in it, then it may well be something that the National Energy Board looks to do in future," he said.

Anderson said Kinder Morgan estimates that one million tonnes of emissions would come from building the project. The company is working on an offset plan that could include planting trees to capture carbon and buying emission credits from other parties, he said.

In its application to the NEB, Kinder Morgan said about 90 per cent of its construction emissions would be generated from land-clearing operations and the burning of waste vegetation.

Final decision in December

The NEB's recommendation has been forwarded to Ottawa, where cabinet is expected to make a final decision in December. Its decision will also be influenced by a newly required assessment of upstream greenhouse gases emitted as oil is produced before it gets to the pipeline.

The cabinet is also to consider a report expected in November from a three-member panel assigned to solicit feedback from communities and indigenous groups near the pipeline route.

Anderson said the project must still win a provincial environmental certificate in B.C., where it faces fierce environmental and municipal opposition.

Capacity nearly tripled

The Trans Mountain expansion between Edmonton and Burnaby, B.C., would nearly triple the existing crude oil pipeline's capacity from 300,000 barrels per day to 890,000 bpd. Most of its capacity is committed to producers who have signed 15- and 20-year contracts to gain access to tidewater and the world oil market.

Anderson said Kinder Morgan is getting to work on satisfying roughly half of the 157 NEB conditions that must be in place before construction can begin.

He said the company will hire more staff over the coming months as it gears up for an expected in-service date of December 2019.

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