NEB Approves Kinder Morgan’s Trans Mountain Pipeline Fees

The National Energy Board  has granted the green light to Kinder Morgan’s toll methodology for its planned expansion of its existing 1,150-kilometer pipeline that runs from Strathcona County in Alberta to Burnaby in British Columbia. Trans Mountain’s Westridge Dock in Burnaby is the only access to the Pacific for Canada’s crude products. When the $5.4 billion twinning project is completed, it should  increase the capacity of the system to handle crude shipments to 890,000 barrels per day, three times its present capacity of only 300,000 barrels per day.

Earlier this year, Canada’s largest oil company, Suncor Energy Inc. had filed a complaint with the National Energy Board (NEB) alleging that Kinder Morgan had plans of charging overly-excessive fees to oil sand companies that were interested in using the Trans Mountain pipeline. Suncor also found that the Trans Mountain pipeline would give Kinder Morgan an average projected return of 28.3 percent over a 20-year contract period. In contrast, the Northern Gateway export pipeline, which is a similar venture, is set to give  11 percent returns to its owner Enbridge Inc. However, of the thirteen companies that have signed long-term agreements for Trans Mountain pipeline capacity, only Suncor and Total had expressed objections.

The Trans Mountain pipeline, which is expected to be completed in 2017, is set to open access to potential customers in Asia through Canada’s West Coast.  These markets are set to bring in at least $8 billion in earnings every year.  Construction is set to begin in 2016 and is slated to finish by the end of 2017. The NEB approval is a boost for Canada’s oil sands industry.