The Trans Mountain Pipeline has been heralded as an ominous storm-cloud over the future of the Canadian energy sector. Currently, the project is under tremendous strains both politically and economically due to many internal and external factors such as legal interference, political partisanship, local protests, environmental activism, as well as a government bailout and continued project delays. The pipeline represents a political and economic shift in Canadian energy development, where fierce legal battles and environmental activism may threaten the future viability of similar projects, including damaging Canadas investment climate.

The project, initially approved in May of 2016, was the only pipeline that was approved by the Liberal government under Justin Trudeau. Recent changes to Canadian energy legislature and environmental regulations meant that companies such as Energy East, Keystone XL and Enbridge Northern Gateway (NEB, 2016) were unable to qualify for projects in Canada. This resulted in the government of Canada being dependent on a single pipeline company to reduce the burden on the overloaded transportation infrastructure. The lack of alternatives for the project meant that delays or cancellation would halt construction or approval efforts (Batool & Abbas, 2017, Arditi, Nayak, Damci, 2017).

The first legal challenges were filed days after the project was approved many citing the lack of consideration of the environmental impact of increased oil-tanker traffic at the end terminals. In British Columbia, local politicians expressed concerns over the impact that oil tankers would have on marine habitats on coastal waters and environmental activists (Paco, & Rodrigues, 2016).

After many delays attributed to many causes (Hamzah, Khoiry, Arshad, Tawil, & Che Ani, 2011), investors in the project were increasingly worried about the long-term viability of the project and planned to cut their losses and end the project. In May 2018, the federal government finalized the purchase of the pipeline from Trans Mountain Pipeline Corp. for $4.5 billion (Bennett, 2018). However, the purchase of the pipeline ensured that the Canadian government became an active stakeholder in the project, and comments by government officials indicate that the project would be in the national interest and that its completion would become a key focus of the federal government.

Opposition and support for the pipeline project has polarized many communities, shaping political discourse for the next election in 2020. Additionally, investor confidence in Canada was shaken as increasing delays on a preapproved project showed how unreliable the approval process was (Alini, 2018). Now, the future of energy mega-projects in Canada is in doubt.

Background of the Project

The Trans Mountain Pipeline was a project that was constructed in 1953, with several expansions to the project being made over the years (Koop, 2006). The first expansion was initially completed in 1957, with recent expansions made in 2006 and 2008. The initial pipeline capacity was approximately 150,000 barrels per day, which met the demands for oil and gas in the province of BC for many decades. The project was initially scoped to cost approximately $7.4 billion to complete.

Due to increasing costs of oil, opportunities to expand oil and gas exports, as well as the relaxation of oil and gas trade laws, the Trans Mountain Pipeline Corp. found opportunity in the project. Expansion plans were made, where the capacity of the pipeline would be increased to over 890,000 barrels per day. On May 19, 2016, the National Energy Board (NEB) cleared the project and declared that the project is in the national interest, recommending that the federal government approve this pipeline expansion. The project was given approval on November 29, 2016, spurred by the recommendation of the NEB. In addition, on January 11, 2017, the British Columbia Environmental Assessment Office (BC EAO) issued an environmental assessment certificate to the Trans Mountain Pipeline Expansion Project (Trans Mountain, n.d.).

The reason that the Canadian government and the NEB wanted the project to proceed was because nearly all the oil produced in Western Canada goes to one market, the United States Midwest (Trans Mountain, n.d.). The low demand in this market due to domestic products resulted in Canadian producers using a steep discount rate on the price per barrel to make it attractive to foreign buyers. At a highpoint, the discount was nearly $40 per barrel Canadian producers could not make a profit by selling oil (Tuttle & Tobben, 2018). The Project Deliverables

The Project Management Institute defines project deliverables as any unique and verifiable product, result, or capability to perform a service that is required to be produced to complete a process, phase, or product (PMI, 2017. pg. 95). Project deliverables are seen typically as the outcomes of the project and can include components of the project management plan. Within the context of PMI definition, the Trans Mountain Pipeline can be summarized as having the following key deliverables that needed to be competed at the end of the project:

• The employment of approximately 15,000 workers during construction of the pipeline.

• The creation of 37,000 direct, indirect, and induced jobs per year during operation.

• Government revenue for the first 20 years will be $46.7 billion (BC will receive $5.7

  billion, Alberta $19.4 billion, rest of Canada $21.6 billion).

• 980 km of new pipeline

• The transport capacity of 890,000 barrels per day Project Stakeholders

The Trans Mountain Pipeline system boasts some of the latest and most technologically advanced systems in the world. The current Trans Mountain Pipeline System, in operation since 1953, spans approximately 1,150 kilometres. The pipeline starts in Edmonton, Alberta and terminates on the West Coast of British Columbia in Burnaby. There are Twenty-three active pump stations located along the pipeline route maintain the lines 300,000 barrel per day (bpd) capacity flowing at a speed of approximately eight kilometres per hour (KPH). In addition to the pump stations, four terminals in Edmonton, Kamloops, Abbotsford and Burnaby house storage tanks for incoming feeder pipelines and tanker loading facilities. Each of the terminals are staffed and the latest monitoring technologies are used to maintain safety and security (Trans Mountain. N.d.).

Each component of the system performs specific tasks to keep North Americas only pipeline system to the West Coast operating safely and efficiently. The pipeline ships products through a process called batching, allowing multiple products, including crude oil, refined and semi-refined products in batches one after the other through the line for different shippers and markets.

As product flows through the pipeline, conditions such as elevation change, fluid friction and the delivery point change the pressure along the pipe. All these factors determine the optimum location of pump stations and even changes in diameter of the pipeline to optimize performance and, in some situations, lessen the demand for additional pump stations to maintain the flow rate. The current Trans Mountain pipeline consists of 827 kilometres of 24-inch pipe, 150 kilometres of 36-inch pipe and 170 kilometres of 30-inch pipe.

At the Sumas delivery point in Abbotsford, BC, the Trans Mountain Pipeline connects with the Trans Mountain Puget Sound Pipeline, a system that has been shipping Canadian crude oil products since 1954 to Washington state refineries in Anacortes, Cherry Point and Ferndale. The 111 kilometres (69 miles) pipeline system is made up of 16 to 20-inch pipe and has the capacity for up to about 240,000 bpd (28,600 m3 per day) depending on petroleum types transported and the balance of deliveries between the two destinations - Anacortes and Ferndale.

Located at varying intervals along the pipeline, determined by terrain and pipeline diameter, 23 electrically powered pump stations keep the product flowing along the line. The pressure along the line drops progressively between these stations as it moves farther from the discharge point of one station and towards the suction of the next. Consistent monitoring and maintenance is done on these systems to ensure compliance with government regulations and safety standards.

Key station components are equipped with instrumentation and controls to ensure safe operation within protective limits and to prevent damage. At pump stations, this equipment monitors the discharge pressure and automatically shuts down the line in case high levels are reached. Automatic leak detection and containment systems are monitored continuously from the Control Centre located in Edmonton, AB. In the event of a leak alarm, an automatic emergency shutdown will isolate the station and trigger a call out for local personnel to investigate.

In addition to the automated features, local operators and maintenance personnel inspect the facilities regularly and perform various types of preventative maintenance to ensure continued safe operations. Figure 2 is a view of the proposed pumping station at Sumas.

Terminals are facilities intended to temporarily store products transported in the pipeline and bring new products into the system before being sent to their final delivery destination. Like all facilities in the Trans Mountain Pipeline System, the terminals have a number of spill prevention and leak detection measures. In addition to continuous monitoring from the Control Centre, and ongoing inspection and maintenance, the facilities are equipped with automatic leak detection and emergency shutdown systems, as well as secondary containment systems to avoid environmental contamination in the unlikely event of an incident.

Edmonton Terminal The beginning of the Trans Mountain Pipeline System, the Edmonton Terminal is supplied by 20 incoming feeder lines bringing product from all over Alberta. The product is held in 35 storage tanks, with a shell capacity of approximately 8.0 million barrels (bbl) on-site prior to being shipped through the pipeline.

The Edmonton Terminal also houses the main control centre for the pipeline system, which remotely monitors all aspects of the pipeline operations using a sophisticated Supervisory Control and Data Acquisition (SCADA) system.

Kamloops Terminal The Kamloops Terminal, containing two storage tanks with a shell capacity of approximately 160,000 bbl, serves as both a hub for local distribution of product shipped from Edmonton as well as a receiving point for products from northeastern BC.

Sumas Pump Station and Terminal Located in Abbotsford, BC, the pump station routes crude oil delivered on the Trans Mountain Pipeline through to the Burnaby Terminal as well as to Washington State via Kinder Morgan Canada Limiteds Puget Sound Pipeline System. The Sumas Terminal contains six storage tanks with a shell capacity of approximately 715,000 bbl.

Burnaby Terminal The end point of the Trans Mountain Pipeline System, the terminal houses 13 storage tanks with a shell capacity of approximately 1.685 million bbl. The terminal serves as a local distribution point, for crude oil and refined products to local terminals, the local Parkland refinery and the Westridge Marine Terminal.

Westridge Marine Terminal Located within Port Metro Vancouver, the marine terminal is capable of accommodating ships up to Aframax-size. In addition to loading tankers, the facility also receives and ships jet fuel to the Vancouver International Airport through the Kinder Morgan Jet Fuel Pipeline System.

Spill History and Reporting Regulations

As a regulated company, Trans Mountain is responsible for reporting spills greater than 1.5 cubic metres or any spill to a water body regardless of volume. Over the years, the NEB has revised the spill reporting criteria for pipeline companies. Trans Mountain has followed all NEB regulations in terms of reporting pipeline leaks and malfunctions, according to the rules and thresholds listed below.

Trans Mountains Spill History

Since 1961, Trans Mountain has reported approximately 82 spills to the NEB. Some of the incidents were below the reportable threshold (Trans Mountain, n.d.). 69.5% of Trans Mountains past spills have occurred at pump stations or terminals. All of the current pump stations and terminals are equipped with monitoring and spill containment systems to provide early detection and lessen impacts and ensure spilled volumes are contained on site. These facilities are rigorously maintained and inspected to meet NEB standards.

The remaining 30.5% of Trans Mountains spills have occurred along the pipeline, with 21 incidents related to releases of crude oil from the pipeline. Of these spills, only nine exceeded the reporting threshold of 1.5 cubic meters with just three of those nine occurring in the last 35 years. In all of these circumstances, Trans Mountain deployed its emergency response and spill management procedures. Since 1956, vessels from our Westridge Marine Terminal have been transporting petroleum products safely through Port Metro Vancouver without a single spill from a tanker.

Current Issues and Challenges

After the purchase of the pipeline, the approval of both government regulators and the NEB, the future of the project seemed secure. However, in August 2018 the federal court of appeals decision to quash Ottawas approval of the Trans Mountain Pipeline expansion is likely to delay the project for years, legal and political observers say (Kane, 2018). This was an unexpected change in the project, which has dire consequences for the valuation of the project as well as its future viability. The review is scheduled to last until February 28, 2019 and a new project plan will be created and sent for future review. The length of time this process will take is currently unknown and it is expected that further legal challenges will be filed on behalf of current opposition parties.

The recent delay lowered the value of the pipeline substantially, where Royal Bank of Canada analysts also calculated the government paid $1.2 billion more than [the project] was worth (Bennett, 2018). As of October 2017, there are 18 separate legal proceedings against the project (Lavoie, 2018). The Trans Mountain Pipeline project has also been heavily criticized as being a waste of tax-payer money as the government purchased the project at an optimistic valuation, prior to the pending review. The end result is that construction of the pipeline is expected to exceed $10 billion, of which the Canadian tax payers will be expected to pay the costs.

Questions:

1. What are some of the key obstacles that will need to be resolved for the project to continue strategically? How would they be ranked in the order of most importance to least importance?

2. You have been appointed the Strategic Manager of Trans Mountain Pipeline Project. Present a SWOT analysis of the project.

3. As a strategic management of the project, what strategic management concepts would you

   consider appropriate to meet the interest of the stakeholders to succeeds? (Hint: CSR).