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Canada's Trans Mountain seeks last-minute route deviation on pipeline expansion

FILE PHOTO: A pipe yard servicing government-owned oil pipeline operator Trans Mountain is seen in Kamloops

OTTAWA (Reuters) -The Trans Mountain Expansion (TMX) project has asked Canadian regulators for a route deviation on a 1.3-kilometre (0.8 mile)section of pipeline in British Columbia, months before the 600,000 barrel per day project is due to start shipping crude.

The application to the Canada Energy Regulator came to light as Prime Minister Justin Trudeau on Wednesday said he was confident the project was a solid investment and that interest was high among Indigenous groups who wanted to buy a share of the pipeline.

The Canadian government bought the pipeline for C$4.5 billion ($3.3 billion) in 2018 to make sure the project was completed after it ran into challenges, including opposition from Indigenous peoples and environmentalists, but costs have ballooned to C$30.9 billion.

TMX is expected to start operating in the first quarter of 2024.

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The regulator is weighing whether to allow Trans Mountain Corp (TMC), the government-owned corporation building the project, to deviate from its previously approved route on a section of the pipeline just south of Kamloops in southern interior British Columbia.

The proposal has encountered opposition from the local First Nation, whose traditional territory the pipeline crosses, according to TMC's application to the regulator, dated Aug. 10.

In the application TMC said it had encountered "significant technical challenges" micro-tunnelling through hard rock formations and requested to instead adjust the pipeline route and use a conventional open trench.

Last week the regulator gave TMC until end of day on Wednesday to provide more information on its request.

The expansion project will nearly triple the flow of crude from Alberta's oil sands to Burnaby, British Columbia, and is intended to unlock Asian markets for Canadian oil, which is now mostly exported to the United States.

Now that it is nearing completion, the government has approached Indigenous groups looking at buying a stake in the pipeline.

"I am very excited and interested that there are so many Indigenous groups interested in purchasing the TMX pipeline. We're engaged in conversations with them right now," Trudeau told reporters in Charlottetown, Prince Edward Island.

"We are confident that the business case for the Trans Mountain pipeline remains solid," he added, when asked whether the government would have to sell the pipeline for less than it cost to build it.

($1 = 1.3566 Canadian dollars)

(Reporting by Ismail Shakil and Steve Scherer in Ottawa and Nia Williams in British Columbia; Editing by Bill Berkrot and Sonali Paul)