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Canada's Trans Mountain pipeline may face 9-month delay over route dispute

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

By Nia Williams

(Reuters) -The Trans Mountain oil pipeline expansion could be delayed by up to nine months if regulators do not approve a route deviation request, the Canadian government corporation building the project said in a regulatory filing on Monday.

The C$30.9 billion ($22.76 billion) pipeline, which will ship an extra 590,000 barrels per day of oil sands crude to Canada's Pacific Coast, was meant to start operating in the first quarter of 2024 but is facing delays and extra costs due to a last-minute route dispute.

Trans Mountain Corp (TMC) has asked the Canada Energy Regulator (CER) to change the approved route on a 1.3-kilometre (0.8 mile) section just south of Kamloops, British Columbia, to avoid micro-tunneling construction that the crown corporation says is not feasible technically or economically.

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But TMC's proposal to instead lay the pipeline through a different area nearby, using horizontal directional drilling and a conventional open trench, is opposed by the Stk'emlupsemc te Secwepemc Nation (SSN) First Nation, an indigenous group whose territory the pipeline crosses.

In a letter to the CER laying out the "worst-case" scenario, TMC said being forced to continue with building a micro-tunnel on that part of the route could delay pipeline completion until December 2024 and add an extra C$86 million in cost.

The earliest the micro-tunnel could be completed is by April, the company said.

However the SSN First Nation said the lands TMC is proposing to disturb as part of the route deviation hold "profound spiritual and cultural significance."

A regulatory hearing on the route deviation request will take place next week in Calgary.

The Canadian oil industry is eagerly anticipating the start-up of the pipeline, which will significantly increase Canada's ability to export crude to the west coast of the United States and Asia.

But the expansion project has been dogged by years of delays and will cost more than quadruple its original budget. Liberal Prime Minister Justin Trudeau's government bought the pipeline from Kinder Morgan Inc in 2018.

($1 = 1.3575 Canadian dollars)

(Reporting by Nia Williams in British Columbia, editing by Deepa Babington and Chris Reese)