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Canada's Trans Mountain oil pipeline faces new delay due to technical issues

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

(Reuters) - Canada's Trans Mountain said on Monday that it had run into technical issues and faces new delays as it tries to complete the final part of expanding its oil export pipeline. The company, which is owned by the Canadian government, said it would take additional time to determine next steps to minimize delays. The company said it is aiming to put the expanded pipeline into service in the second quarter.

A Trans Mountain official said last week that start-up was expected in early April, with volumes ramping up to full capacity by the end of the year.

The C$30.9-billion ($23.04 billion) expansion project 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 main challenge remaining for the expansion project is the installation of a section of pipeline through a mountain in British Columbia, which the company had said it expected to complete early this week.

Trans Mountain's delays in the past two months have lowered Canadian heavy oil prices, but the company thought such problems were behind it after a regulator approved its construction change.

The discount on Western Canadian Select for April delivery against the North American benchmark grew to $16.35 per barrel, compared with $14.80 before Trans Mountain announced the latest delay, a market participant said. The bigger discount reflected concerns about constrained pipelines due to Trans Mountain's latest delay.

($1 = 1.3414 Canadian dollars)

(Reporting by Rod Nickel in Winnipeg and Rahul Paswan in Bangalore; editing by Jonathan Oatis; Editing by Marguerita Choy)