- Partner News
- Media Releases
- Mainstream News
May 30, 2022
Expansion Project Surpasses Halfway Point of Construction with Continued Focus on Safe Execution
Trans Mountain Corporation (TMC) today released the company’s financial statements and associated management report for the three-month period ending March 31, 2022. The company’s financial results were also included in Canada Development Investment Corporation’s consolidated quarterly financial statements.
Rob Van Walleghem, Interim President of Trans Mountain introduced the financial information with congratulations and reinforcement of the Corporation’s safety values. “Further to my recent appointment to the role of President (Interim) for Trans Mountain, I am pleased to recognize the tremendous commitment and combined efforts of our workers, contractors and Indigenous partners whose achievements have now surpassed the half-way point of construction on the Expansion Project. As impressive as this milestone is, I am even more grateful for their continued focus on the safe construction and operation of the pipelines while delivering on our strategic priorities for 2022. This year, we will experience peak construction levels, with over 13,000 workers engaged across the Project right-of-way in Alberta and BC. As we continue toward Expansion Project completion, our highest priority and focus remains on diligently ensuring the safety of all workers and those living within the communities where we are working.”
Net income for the three-month period ended March 31, 2022, increased by $55.9 million to $107.2 million, as compared to $51.3 million in the same period of the prior year. The increase is due to $67.2 million increase in equity earnings (AFUDC), $10.3 million decrease in interest expense, net of capitalized interest, partially offset by $18.5 million increase in income tax expense, $2.0 million decrease in adjusted EBITDA and $0.6 million increase in depreciation and amortization expense. The remaining movement in net income relates to changes in foreign exchange gains and losses, and other items.
“Trans Mountain’s first quarter saw a strong performance operationally and financially,” said Rob Van Walleghem, Interim President of Trans Mountain Corporation. “We have seen continued and steady demand for our unique access to tidewater, with available capacity on the Trans Mountain pipeline fully utilized for the quarter, and 2021, with system nominations apportioned throughout. We are also nearing completion on recovery work for our in-service pipeline that resulted from the catastrophic floods in British Columbia this past fall.”
The pipeline operated at full capacity with an average daily throughput for the three-month period for the mainline of approximately 305,000 barrels per day, with 40,000 barrels per day to Westridge Marine Terminal and 177,000 barrels per day to Washington State on the Puget pipeline.
During the first quarter of 2022, TMC announced an update of its Project schedule and cost estimates and announced the total Trans Mountain Expansion Project cost increased from $12.6 billion to $21.4 billion. This estimate includes the costs of project enhancements, changes, delays and financing, including impacts of the COVID-19 pandemic and the substantial preliminary impacts of the November 2021 BC floods in the Hope, Coquihalla and Fraser Valley areas.
Work on the Expansion Project progressed to more than halfway construction completion by the end of the period. To date, Trans Mountain and our contractors have hired approximately 22,000 people, of which 2,450 more than 10 per cent were Indigenous. As of March 31, 2022, there are currently 13,565 people working on the Project in hundreds of communities across BC and Alberta.
“We expect to see peak construction across British Columbia this year. This past quarter we completed construction in Greater Edmonton, are more than halfway complete overall, and are making strides in our terminals and facilities” continued Van Walleghem. “Despite flooding in late 2021 and flood cleanup efforts continuing into 2022, work progressed, and crews are active with ditching, stringing and lowering activities. We look forward to safe and efficient progress for the rest of 2022.”
As of March 31, 2022, the overall Project including upfront costs of permitting, regulatory approval, advance purchase of materials and financial carrying costs is approximately 60% complete. Construction is more than halfway complete, with $13.7 billion in capital spending incurred, including $2.1 billion in the quarter. Trans Mountain expects that 2022 will see peak construction for the Expansion Project, with thousands of people working at hundreds of sites across Alberta and British Columbia.
Trans Mountain anticipates completion of the Project to occur in the fourth quarter of 2023. Trans Mountain’s projected Adjusted EBITDA is expected to be approximately $1.7 billion in the first full year of the Expansion Project’s operation and expected to grow annually thereafter. These projections are underpinned by long-term contractual commitments for 80 per cent of the system’s 890,000 barrels a day of capacity.
Late in the second quarter of 2022, Trans Mountain will release its second ESG report outlining the Corporation’s results and aspirations through environment, social, and governance principles. Although the greenhouse gas (GHG) emissions associated with operating a pipeline are relatively small, Trans Mountain will be setting targets to reduce and/or offset our scope 1 and scope 2 emissions which will support the Government of Canada’s ambition to reach net zero by 2050.
We make use of certain financial measures that do not have a standardized meaning under U.S. GAAP because we believe they improve management’s ability to evaluate our operating performance and compare results between periods. These are known as non-GAAP measures and may not be similar to measures provided by other entities. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization and equity AFUDC) is a non-GAAP measure we use to evaluate our operating performance absent the impact of financing decisions, non- cash depreciation and amortization, and non-cash equity AFUDC.
AFUDC (Allowance for Funds Used During Construction) is an amount recognized by rate-regulated entities to reflect a return on the equity and debt components of capital invested in construction work in progress.
86 total views, 2 views today