The cost of the Emera Brunswick pipeline has surged to almost a half billion dollars.
The pipeline, originally priced at $350 million, is expected to cost $465 million, says Emera Inc., the Nova Scotia energy firm behind the 145-kilometre natural gas pipeline.
The pipeline runs from the Canaport liquefied natural gas terminal in Saint John to St. Stephen and into Maine.
Higher material and construction costs, as well as changes in construction plans and more rock than was anticipated along the route, are some of the reasons behind the escalating price tag.
Sasha Irving, spokeswoman for Emera, said energy industry-wide trends such as increasing labour expenses also played a role in the cost overruns.
“Cost of labour is one of the contributing factors, but I wouldn’t say it’s too high up on the list or that it’s out of whack for your province in particular,” she said from Halifax.
The cost overruns are not expected to make New Brunswick a less desirable place for future investment, she said.
“The fact this project has gone a little bit over budget wouldn’t necessarily impact future investments in the province,” she said.
In a conference call with analysts last week, Emera chief executive officer Chris Huskilson said his firm’s contract with Spanish oil company Repsol YPF, which is a partner along with Irving Oil in the Canaport LNG terminal, protects Emera from “price escalation.”
Emera is expected to recover its costs in tolls levied over the life of the pipeline.
Emera’s (TSX: EMA) shares were at $21.68, Monday down slightly from Friday’s close of $22.
Tim Curry, president of the Atlantica Centre for Energy, said the increase in the cost of the pipeline project shouldn’t come as too much of a surprise.
Material and labour costs are rising for energy projects throughout the country, he said.
The rising cost of the project is “certainly something to keep an eye on,” he said. “If this was the only place that it was happening, then I’d be worried. But it’s not.”
Susan Harris, spokeswoman for the pipeline project, said work has been slowed by flooding on the St. John River.
“We have to wait until that calms down,” she said. “Our drill tent on the east side is flooded, so we’re not able to do anything there.”
Harris said while work has slowed down, the pipeline is expected to be completed on schedule.
“We didn’t get as much done in the urban area outside of Rockwood Park as we wanted to. But that’s just a matter of putting an extra crew or two in the urban areas once we get through the spring thaw shutdown,” she said. “Our in-service date is still early November.”