Motz not happy about Trans-Mountain pipeline purchase

Daniel Fowler
May 30, 2018

In an extraordinary move aimed at boosting Canada's tar sands industry in the wake of sharp environmental opposition, the Canadian government said Tuesday that it will spend $3.5 billion to buy the Trans Mountain pipeline and triple its capacity.

Kinder Morgan will proceed on twinning the pipeline while the sale is being finalized.

The purchase, for 4.5 billion Canadian dollars, ensures that the Trans Mountain pipeline, which carries oil from Alberta to a port in a suburb of Vancouver, British Columbia, will begin a planned expansion this summer. It does not matter who owns the pipeline.

"Any climate change plan that ignores the needs of working people is doomed to fail", Alberta Premier Rachel Notley said after the deal was announced.

Prime Minister Justin Trudeau, who spoke with Horgan Tuesday, reiterated his government's opinion that it has jurisdiction over interprovincial pipelines.

The governments made a big gamble Tuesday, following a familiar path that saw Ottawa and Alberta invest in decades past in projects such as Syncrude and the bi-provincial upgrader.

Ottawa could also deploy the police and troops to maintain a barrier between protesters and construction workers.

Ottawa's purchase means B.C.is seeking court approval for the right to regulate not just a federally approved project, but a federally owned one. It does not intend to own the project for long.

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Peter Milobar, Stone's counterpart in Kamloops-North Thompson, blamed Horgan and Environment Minister George Heyman for causing the impasse that led to the federal government's decision, saying it's time the two "become regulators, and not activists".

On May 30, 2017, the parent company had spun out 30 per cent of its Canadian business unit Kinder Morgan Canada in an initial public offering that raised $1.75 billion, used to pay down the parent company's debt. "This is a sad day for British Columbia".

The decision represents "a massive, unnecessary financial burden on Canadian taxpayers", Canadian Taxpayers Federation Federal Director Aaron Wudrick said.

Kinder Morgan last month gave Ottawa an ultimatum: Chairman Steve Kean said the company would suspend all work on the expansion project entirely if the legal issues surrounding it can not be resolved by May 31, adding that it would not continue risking shareholder funds on the project unless the clouds over it clear.

"It's a mess out there", said a Calgary industry source not authorized to speak publicly. "Given it will be stuck in court for a while, I don't think we will see this pipe built anytime soon". If the government succeeds in getting the pipeline built, it plans to sell it back to the private sector.

The B.C. Chamber of Commerce welcomed the move, although it expressed concern about Canada's "broken" regulatory regime. "So, I guess the Kinder Morgan shareholders weren't willing to take the risk but the Canadian government has determined that taxpayers are willing to take the risk".

National Bank analyst Patrick Kenny believes the overall impact of the sale is "slightly negative" for Kinder Morgan, and plans to revisit the bank's $19 price target for the company.

"Canada's purchase of a tar sands pipeline and expansion project eviscerates any claim it has to climate leadership at a key moment - doubling down on the world's dirtiest oil, rather than closing the gap on the country's Paris climate commitments", said Anthony Swift, the Canada program director for the US -based Natural Resources Defense Council, in a statement.

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