The beleaguered pipeline was originally supposed to cost upwards of $15 billion, but cost overruns, higher tariffs and delays have nearly doubled the price tag, with further delays possible.Stephen Ellis, equity strategist at Morningstar Research Services, was in favour of the project in the beginning, as it was meant to more easily transport oil from Alberta to Asia, but now he saidand companies have found cheaper solutions.
“We just can’t put numbers together that make the pipeline worth anywhere close to the $30 billion it’s going to be costing,” he told BNN Bloomberg Friday.While the original plan was to use the pipeline for export to Asia, Morningstar suggests most of the oil from Trans Mountain will still end up in the U.S., while other options for U.S. shipping will still be cheaper.
“The focus of the pipeline has certainly been called into question,” Ellis said. “When you think of the very large crew carriers on the Gulf Coast and their ability to use those is much more efficient.” The good news for Trans Mountain is many companies have long-term contracts with project, but Ellis believes some may be looking to get out of their deals, with discounted sales to third parties as an option.
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