Who Took the Hit on TMX?
By Gary Porter
The history of the Trans Mountain Pipeline (TMX) is a story of colossal ambition, depicting the shift from a Cold War-era energy project to the most controversial, destructive and expensive infrastructure endeavor in Canadian history.
The original 1,150 km pipeline was built in a record 30 months, following the major Leduc oil strike in 1947. It was seen as a strategic necessity during the Korean War to move crude from Alberta to refineries in Burnaby, BC, and Washington State. The first oil arrived at Burnaby on October 17, 1953.
By the early 2000s, the original line was full. Kinder Morgan proposed the expansion in 2012 to increase capacity from 300,000 to 890,000 barrels per day. However, the project faced fierce opposition from environmental groups and Indigenous communities over oil spills and tanker traffic, leading to years of legal battles and policy changes.
Facing indefinite delays and massive cost overruns, Kinder Morgan threatened to scrap the project in 2018. To save it, the Canadian government bought the pipeline for C$4.5 billion in August 2018. That turned Ottawa into the operator of a major oil pipeline for the first time in decades.
Construction was plagued by COVID-19, supply chain issues, and natural disasters. BC NDP Premier John Horgan fought it through to the Supreme Court and lost. Hundreds of British Columbians were arrested trying to stop construction, including Elizabeth May who flew in from Ottawa just long enough for a photo op.
After costs ballooned to over C$34 billion (six times the original estimate), the expansion finally opened on May 1, 2024.
Today, the pipeline moves nearly 900,000 barrels per day to global markets, boosting Canadian oil prices. However, the government is stuck holding the debt. They are currently trying to sell the pipeline back to private investors, including Indigenous groups, likely at a multi-billion-dollar loss.
Here is a breakdown of the government’s plan to sell the Trans Mountain pipeline and its economic impact so far.
Ottawa never wanted to be a long-term pipeline operator. It bought the asset in 2018 for $4.5 billion just to ensure the expansion was actually completed, knowing well that the certain loss would be foisted on the working class, not the filthy rich. The current plan has two main phases.
Phase 1 (Indigenous Stake): The government is first talking with over 120 Indigenous nations along the route to offer them an equity stake. This is seen as a key step toward reconciliation. This deal is far from certain and fast-talking federal lawyers will do their best to cheat the Indigenous peoples. Fortunately, the Indigenous people have some very experienced Indigenous lawyers on their side.
Phase 2 (Remaining Stake): After the Indigenous stake is set, the government will seek commercial buyers for the rest. Pembina Pipeline (through the Chinook Pathways partnership) and Project Reconciliation have expressed interest.
The sale is complicated by the project’s massive financial baggage. The expansion cost ballooned to over $34 billion—six times the original estimate.
The Valuation Gap: Analysts estimate the pipeline is currently worth between $15 billion and $25 billion. That means the government is likely facing a loss of at least $9 billion on the sale.
Toll Uncertainty: Pipeline value is derived from the discounted value of future revenue based on shipping tolls, which are still being negotiated with oil companies, making future earnings hard to predict.
Limited Buyers: Major players like Enbridge aren’t interested, and pension funds are avoiding fossil fuel assets due to climate related risk exposure.
Despite the financial headache for taxpayers, TMX is delivering major economic wins for Canadian oil, given current global instability and most recently because of the criminal, unprovoked attack on Iran by the US and Israel.
Market Access & Pricing: Canada no longer has to sell almost all its oil to the U.S. at a discount. TMX now ships 890,000 barrels per day to Asia. Due to conflicts in the Middle East, Asian buyers are now paying a US$2–3 premium for Canadian oil to replace disrupted supplies.
Revenue & Royalties: Higher oil prices mean higher royalties for Alberta and better cash flow for producers across the board.
The “Capacity Cliff”: TMX is already operating at full capacity—sooner than expected. Because of this demand, Trans Mountain is planning further expansions to add an extra 360,000 barrels per day by 2028.
The bottom line: Canada has gained a critical economic lifeline and access to world prices, but taxpayers are facing a multi-billion-dollar loss when the government finally sells it.
The murderous onslaught against the people of Iran, a war crime and a massive tragedy is enriching Canadian oil billionaires to the delight of Mark Carney and Danielle Smith. But just around the corner is a $10 to $20 billion dollar loss to be borne by the workers of Canada.
Moreover, the entire project is a massive support to fossil fuel contamination of our future. It is certain to speed-up killer global warming. There is no Planet B.