The Bellislilunnel–Completely Unaffordable

Every so often you will hear talk about a proposed under-sea tunnel across the Strait of Belle Isle connecting mainland Canada—Labrador or Quebec—with the Island of Newfoundland. The benefits to the province as a whole are often pointed out—things like the possibility of increased tourism, more reliable transportation schedules and the potential for construction-related jobs—however the costs associated with the project are generally not discussed. That’s too bad because they are exceedingly high.

A study commissioned in 2004 indicated that the tunnel could be built at a cost of $1.7 Billion, however, for the life of me I cannot understand where the numbers came from. As I see it they are underestimated by an amount that can only be termed laughable.

Let’s assume that the proposed project—and let’s term it the Bellislunnel—can be to some degree compared to its much more famous elder sibling, namely the Channel Tunnel or Chunnel.

The Chunnel cost $21 Billion dollars and is 50.5 km. Since the Chunnel was completed in 1994 you need to adjust for inflation. According to the Bank of Canada that would be $31 Billion today. Dividing that by the length gives a cost of $600 Million /km.

To get across the Strait, the Bellislunnel will need to be 18 km long. Simple math gives an overall estimate of $10.8 Billion, a figure nowhere near the amount from the 2004 study.

As I see it my figure is a low-ball estimate since the Chunnel was built under ideal conditions, specifically:

  • Between two countries that each had a healthy industrial base right next to the endpoints;
  • With guaranteed sustained, heavy use that would defray the costs;
  • Through a region whose geology was well known and well-suited to tunnelling;
  • Through a no-ice, no-iceberg zone—a place where no ice impact and scouring would be a factor;
  • In an area that does not experience harsh weather effects.

In light of this, it would be reasonable to mark up the estimated cost by at least 40% giving a more realistic figure of $15.1 Billion but let’s leave it as is, for now.

The $10.8 Billion price tag needs to be mortgaged. Let’s assume a 40-year term and a 3.8% interest rate, which is about the same as the terms for the Muskrat Falls project. That gives an annual finance cost of $525 Million, a figure that does not include maintenance. Let’s put it on perspective: the Bellislunnel will cost every person in the province over $1000/year, not counting usage fees and maintenance.

The only current fund available to offset this is the budget allocated to Marine Atlantic, which operates the ferries between NL and NS. That is currently only $19 Million but has been more typically in the $150 Million range, which though sizeable in its own right is paltry compared with the debt payment needed to service the construction loan.

Using Marine Atlantic’s budget as an offset complicates things even more. It’s been done before, yes—he PEI Confederation Bridge’s main source for revenue is the Federal Government grant taken from the monies that used to pay for the ferry the bridge replaced. This complicates things moreso than they did in PEI.

Marine Atlantic is, in effect, the highway linking Newfoundland to the mainland. If you use its budget then you also have to account for a proper highway connection to the mainland. As it currently exists the Trans Labrador highway could not provide the connection that’s currently needed. Not only could it not handle the traffic volumes but, more importantly, the conditions that exist on it in winter would mean delivery schedules subject to frequent shut-downs owing to winter storms, making for a situation that would in all likelihood be even less reliable than the current state. That’s not to mention the added fuel and maintenance costs owing to the much longer route.

A new highway linking Blanc Sablon to Kegashka along the south shore of Quebec would be equally unrealistic. Not counting the bridges the 400-450 km road alone would likely cost around $2.5 Billion. A quick glance at a map of the region also shows the terrain to be particularly watery, marked by numerous lakes and rivers so the many bridges required would increase this base cost by a considerable amount, perhaps even doubling it.

Some may object to the numbers I’ve provided, noting, for example that the Chunnel is in fact three tunnels, two train tunnels and one for maintenance. They may say they we only need one so the cost needs only be one third as large. That’s not accurate. Certainly two train tunnels are not needed given the anticipated traffic volumes but the maintenance tunnel is still required so the best reduction would be by one-third, not two-thirds, bringing it down to a still unaffordable $350 Million per year.

Admittedly this simplistic essay has limitations. First you can’t really model things using simple proportions as I have here. There are start-up costs such as environmental impact studies that do not scale; they are what they are so reductions downward as I have done here are likely going to result in under-estimates. Second, most projects like this one tend to go way over budget so any figures you have seen are really rock-bottom estimates with the real costs—assuming the go-ahead was ever given—being possibly as much as twice the suggested amounts. There’s also the issue of ongoing maintenance.

In either case the status of the Bellislunnel project should remain, for now, as unaffordable.

 

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