Canada regulator denies Trans Mountain expansion variance request

By Nia Williams

(Reuters) -The Canada Energy Regulator (CER) on Tuesday denied a request from the Trans Mountain Expansion (TMX) project for a variance on a section of oil pipeline being built in British Columbia.

TMX had asked to be allowed to install smaller diameter pipe in a 1.4-mile (2.3-km) section of the oil pipeline after encountering "very challenging" construction conditions due to the hardness of the rock in a mountainous area between Hope and Chilliwack.

The CER denied the variance, according to a letter posted on the regulator's website. The regulator said it would give reasons as soon as possible, but had initially issued the decision without reasons because Trans Mountain had asked for an expedited process.

At a hearing on Nov. 27, Trans Mountain told the CER that denying the variance request would likely add an extra 55 to 60 days to the construction schedule.

The CER decision is yet another setback for the troubled expansion project, which is intended to triple shipments of crude from Alberta to Canada's Pacific coast, to 890,000 barrels per day, once it starts operating.

TMX is due to start shipping oil by the end of March 2024, but a string of construction-related hurdles have fueled concerns the expansion could be delayed.

The C$30.9 billion ($22.78 billion) project, first proposed by Kinder Morgan in 2012, has been beset by years of regulatory delay and cost over-runs and was bought by the Canadian government in 2018 to ensure it got built.

(Reporting by Rahul Paswan in Bengaluru and Nia Williams in British Columbia; Editing by Will Dunham)