This article was published by The Energy Mix on Sept. 16, 2025.
The “financial quagmire” of the Trans Mountain Pipeline expansion—a project whose final price tag ballooned 584 per cent from 2012 to 2024—should serve as a cautionary tale against risking public funds when businesses back away, the United States-based Institute for Energy Economics and Financial Analysis (IEEFA) warns in a new report this morning.
“Oil infrastructure development, once seen as a financial boon, is beset by rising costs and lower price trends,” said Mark Kalegha, IEEFA energy finance analyst and co-author of the report. “As the Canadian government experiences pressure to pay industry infrastructure costs from public coffers, it’s time to step back and take a hard look at the energy questions Canada faces.”
IEEFA, an independent research group that studies global energy markets, writes that Ottawa “essentially bailed out” the opposition-plagued TMX project when Kinder Morgan Corporation’s CEO threatened to cancel it, buying it for around C$4.7 billion in 2018. Since then, Canada has provided TMX $35.6 billion in direct funding, about $1.4 billion more than commonly reported.
Overall public exposure surpasses the $34.2 billion spent on pipeline construction, IEEFA writes. The final tally “also includes advances made toward working capital, operations, regulatory compliance costs, and financing concessions. Once indirect subsidies are included, government exposure rises above $40 billion.
The high cost of the pipeline put “enormous pressure on the pipeline toll-setting process, resulting in strenuous objections from the pipeline’s shippers,” IEEFA wrote in a release. “More than $25 billion of the funding provided is ineligible for recovery via proposed shipper tolls.”
Now, as some private interests and public officials call for more pipelines across Canada amid a trade war with the U.S., “it is worth taking a closer look at the financial quagmire of the Trans Mountain Expansion pipeline,” IEEFA says. Calling the TMX’s financial track record “a red flag,” IEEFA writes that taxpayers could ultimately be burdened with paying the costs of another such project.
Related Story: Top Free-Market Think Tank Unsure That Canada Needs More Pipelines
As for new import markets in Asia, China is now TMX’s biggest customer, surpassing the U.S., but “the receptivity” of China to an influx of Canadian oil is not guaranteed to grow or even plateau, IEEFA writes. Competition for the soon-to-be declining China oil import market is already “fierce.”
Meanwhile, TMX is still operating at around 80-85 per cent capacity, with a projected 16 per cent excess capacity in 2025. Tankers receiving its oil are being filled to 70 per cent. Still, Trans Mountain Corporation says the pipeline is running “spectacularly well,” on track to pay $1.25 billion worth of interest, fees, and dividends to the government this year.
Alberta’s oilsands production is continuing to expand, which could provide more oil for export if reliable markets are found. Company officials are looking for ways to increase the pipeline’s capacity, including by using drag reducing agents that could increase the amount of oil flowing through the pipe by 5 per cent to 10 per cent, or a more expensive option that would require $3 billion to $4 billion to build more powerful pumping stations, reports CBC News.
The Globe and Mail adds that vessels will be able to be filled to 100 per cent after dredging works in the port in Vancouver are completed in late 2026 or 2027.
Be the first to comment