Trans Mountain pipeline sees second-quarter service date, higher cost

VANCOUVER, British Columbia (Reuters) - Trans Mountain Corp, the Canadian government-owned oil pipeline company, continues to target a second-quarter in-service date for its expansion and expects the project's cost to rise 10%, according to a filing.

Trans Mountain said in the filing on Monday to the Canada Energy Regulator, however, that commencement for firm service contracts with shippers is May 1.

That represents a one-month delay from its prior commencement date, RBC Capital Markets analysts said in a note.

The expansion will nearly triple the flow of crude from Alberta to Canada's Pacific Coast to 890,000 barrels per day, but has been plagued by years of delays and cost overruns.

The new commencement date is in line with Trans Mountain's most-recent estimate of starting service in the second quarter despite ongoing construction problems.

Cost estimates are now 10% higher than the C$30.9-billion estimate that Trans Mountain provided in May, but the company will provide another update to factor in actual costs after it is mechanically complete, the company said.

Greater pipeline capacity will enable more Canadian crude to flow to refineries on the U.S. West Coast and in Asia.

Canadian oil and gas producers will slightly increase capital spending this year in part because of the pipeline expansion, the Canadian Association of Petroleum Producers said on Tuesday.

(Reporting by Rod Nickel in Vancouver, British Columbia; Editing by Marguerita Choy)