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Trans Mountain Completes Final Cost Estimate Review with Shippers; Maintains Strong Commercial Support for Expansion Project
Thursday, March 9, 2017 9:00 am EST
Public Company Information:
"Over the past five years, we’ve listened to Canadians and made changes to the project that have increased costs, but made our project better"
HOUSTON--(BUSINESS WIRE)--Since receiving Government of Canada approval, Trans Mountain has been moving forward with the regulatory, commercial and construction planning aspects of its expansion project and has made significant positive progress.
The expansion project came about in response to requests from oil shippers to help them reach new markets by expanding the capacity of North America’s only pipeline with access to the West Coast. In 2012, 13 shippers made 15- and 20-year commitments of 708,000 barrels per day or roughly 80 percent of the capacity of the expanded pipeline, with the other 20 percent reserved for spot volumes consistent with National Energy Board (NEB) direction.
Following Federal approval, and consistent with its agreements with firm shippers, Trans Mountain delivered a final cost estimate and revised tolls to its shippers. Shippers had the option to keep their volume commitments or turn them back and pay their share of development costs incurred to date. Since receiving the final cost estimate and revised tolls, some existing and prospective shippers have picked up capacity from other shippers. The net result of that process is the turn back of only 22,000 barrels per day or 3 percent of the previously committed barrels. Those barrels will be made available, on the same terms as existing commitments, to the market in an open season that will begin on March 9. An open season is a commonly used commercial process allowing customers to secure space on the pipeline. In this open season, the only space available will be the 22,000 barrels per day of capacity turned back, as the remaining 97 percent of the firm volumes are under contract with existing or new shippers.
Kinder Morgan’s final cost estimate and increased tolls reflect the updated project cost of $7.4 billion CAD. The higher project cost can be attributed to a number of factors including costs associated with the NEB’s 157 Conditions and project changes as a result of public feedback such as thicker pipe wall, additional drilled crossings in environmentally sensitive areas and the Burnaby Mountain tunnel.
“It’s been a lengthy and rigorous process and in spite of the many changes in the markets over the five years since our customers signed on, we knew commercial support for this project remained strong,” said Ian Anderson, president of Kinder Morgan Canada.
“Over the past five years, we’ve listened to Canadians and made changes to the project that have increased costs, but made our project better,” added Anderson. “We’re proud of the project we’ve developed and how it reflects the values and priorities of our communities and we’re pleased our customers have re-confirmed their support and interest in its purpose of delivering much needed West Coast access for their products.”
Next steps for the project include arranging acceptable financing and a final investment decision by Kinder Morgan. Construction is set to begin in fall 2017 and the project is expecting an in-service date of late 2019.
About Trans Mountain Expansion Project
In November 2016, the Government of Canada approved Kinder Morgan Canada’s plan to expand the existing Trans Mountain Pipeline system – between Edmonton, Alberta, and Burnaby, British Columbia. The project is subject to 157 Conditions from the National Energy Board that covers the life span of the project, and 37 Conditions attached to the Environmental Certificate received from the Government of British Columbia in January 2017. For almost 60 years, the 1,150-km Trans Mountain pipeline system has been safely and efficiently providing the only West Coast access for Canadian oil products, including about 90 per cent of the gasoline supplied to the interior and south coast of British Columbia. For more information, please visit www.transmountain.com.
About Kinder Morgan
Kinder Morgan, Inc. (NYSE: KMI) is one of the largest energy infrastructure companies in North America. It owns an interest in or operates approximately 84,000 miles of pipelines and 155 terminals. The company’s pipelines transport natural gas, gasoline, crude oil, CO2 and other products, and its terminals store and handle petroleum products, chemicals and other products. For more information please visit www.kindermorgan.com.
Important Information Relating to Forward-Looking Statements
This news release includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities and Exchange Act of 1934. Generally the words “expects,” “believes,” anticipates,” “plans,” “will,” “shall,” “estimates,” and similar expressions identify forward-looking statements, which are generally not historical in nature. Forward-looking statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management, based on information currently available to them. Although Kinder Morgan believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance that any such forward-looking statements will materialize. Important factors that could cause actual results to differ materially from those expressed in or implied from these forward-looking statements include the risks and uncertainties described in Kinder Morgan’s reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year-ended December 31, 2016 (under the headings “Risk Factors” and “Information Regarding Forward-Looking Statements” and elsewhere) and its subsequent reports, which are available through the SEC’s EDGAR system at www.sec.gov and on its website at ir.kindermorgan.com. Forward-looking statements speak only as of the date they were made, and except to the extent required by law, Kinder Morgan undertakes no obligation to update any forward-looking statement because of new information, future events or other factors. Because of these risks and uncertainties, readers should not place undue reliance on these forward-looking statements.