Canadian government to buy troubled Trans Mountain pipeline

Katie Ramirez
May 30, 2018

The federal Liberal government is spending $4.5 billion to buy Trans Mountain and all of Kinder Morgan Canada's core assets.

Finance Minister Bill Morneau believes Canada's authority to build the pipeline will be able to overcome any resistance, be it from protesters or the B.C. government.

"To guarantee the summer construction season for the workers who are counting on it, and to ensure the project is built to completion in a timely fashion, the federal government has reached an agreement with Kinder Morgan to purchase the existing Trans Mountain pipeline, and the infrastructure related to the Trans Mountain expansion project", Morneau told reporters in Ottawa.

"B.C.is doing all the right things" said May.

Federal Finance Minister Bill Morneau made the announcement from Ottawa and says the deal represents a sound investment.

"For years and years and years, we've had pipelines built across Canada and the United States".

Kinder Morgan investors must still approve the sale, which is scheduled to close in August, but the deal will allow construction to resume immediately, the minister added.

Kinder Morgan Canada gave Ottawa until May 31 to come up with reassurances it could press ahead with plans to more than double the capacity of the existing pipeline amid efforts by British Columbia to block construction.

"Though it is an unequivocal statement of support to getting oil to tidewater and for the pipeline".

In 2007, Kinder Morgan reported to the National Energy Board that it valued the Trans Mountain pipeline system at $550 million.

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Alberta will contribute up to C$2 billion toward unforeseen costs, payable once the project is complete, Premier Rachel Notley said.

Kean spent a significant amount of time on the conference call highlighting the company's other assets in Canada, which include its oil storage tanks and crude-oil-by-rail facilities in Edmonton, its Vancouver Wharves Terminal for exporting mineral concentrates from the West Coast, and its Cochin pipeline, which sends light oil to the oilsands so it can be blended with bitumen to flow through pipelines. "Kinder Morgan has gotten rid of its assets, they are free and clear". If Canada buys the pipeline, it will also acquire the personnel needed to continue with construction.

The Council of Canadians, meanwhile, attacked Ottawa's purchase as a "Big Oil bailout" that would not remove obstacles to the pipeline expansion.

"I think there will be a lot of private sector interest in this project once the political risk is taken out of it".

But he also acknowledged: "It will be a federally owned project and that has some difference in terms of the paramountcy of the federal government".

Canada needs projects like the expansion created to triple Trans Mountain's capacity to move crude oil and refined products from the Alberta oilsands and Edmonton refining complex to the West Coast, said Chris Bloomer, CEO of the Canadian Energy Pipeline Association.

When Canadian taxpayers appreciate the scale of the federal abuse of trust here as well as the government's blatant corporate welfare for a Texas pipeline company, there will be hell to pay from coast to coast.

"This allows us to get rid of the political risk around [the pipeline] because we [are imposing] federal jurisdiction over the project", he said.

Canada's oil sector has been stung in the past year as foreign energy companies retreated amid concerns about the environmental toll, high production costs and a risky regulatory regime.

"He had an opportunity to walk away from pipeline politics and get on with the real work of leading Canada, and the world, in a 100 per cent renewable energy revolution, but instead he's opted to ignore science, Indigenous rights and the voices of people across Canada and bailed out a unsafe, unwanted pipeline with public money".

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