If you're buying Trans Mountain, where's your backing for Energy East: Raitt

Daniel Fowler
May 31, 2018

The Canadian government will buy Kinder Morgan Canada's Trans Mountain oil pipeline for a whopping C$4.5 billion.

Horgan told reporters in Victoria the federal government's takeover of the project changes the legal situation, but his contentious legal action isn't aimed at any specific project.

"Some felt this was in the bag, and that it would be not built after all, but sadly for them it has been made clear this thing is going to be built", Crey said.

One institutional investor in NY, who spoke on condition of anonymity, said that if the pipeline is built he expects the federal government to make $2 billion in profit when it eventually sells the asset.

The project has been in difficulty since British Columbia went to court to try to block it.

The government's purchase price is reasonable if broken down into $3.5 billion for the existing pipeline and $1 billion to recoup money already spent on the expansion, said Richard Masson, former CEO of the Alberta Petroleum Marketing Commission and a fellow at the University of Calgary's School of Public Policy.

The agreement will also indemnify a potential buyer for additional costs caused by government attempts to delay or stop the project, with the Alberta Government on the hook to put up $2 billion for 'unforeseen circumstances'. Instead, he said Trudeau did nothing to fast-track any constitutional references and never introduced legislation to "entrench and enshrine federal jurisdiction".

That price doesn't include the construction costs - which finance minister Bill Morneau refused to reveal at Tuesday morning's press conference but which one investor estimated at $6 billion - or the loan guarantees to get the project back up and running during this construction season.

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The Houston-based company had stopped all non-essential spending on the project last month after facing broad opposition from environmental groups, indigenous communities, and the province of British Columbia.

Defending the government's decision, Prime Minister Justin Trudeau said, "Canada loses C$15 billion a year because oil can not be exported anywhere but the United States".

Kinder Morgan has agreed to take part in marketing the project; Ottawa wants to avoid becoming a pipeline owner if at all possible. He said that shareholders would receive a "fair price" for the assets.

"I believe we have an obligation to ensure that we are doing everything we can to avoid the catastrophic consequences of a diluted bitumen spill", he said. "Really the only difference is Kinder Morgan's convinced Canada to pay for the project".

Will George, a member of the Tsleil-Waututh Nation who is leading the protests organized by Protect the Inlet (the watch house) on Burnaby mountain, says his groups' resistance will continue.

"Every time that the government has taken over these projects, we've found that they have lost money; they always have been subsidized by taxpayers and those subsidies continue until such time as the federal government gets out of the business".

That sentiment was similar to what Moe said Tuesday in response to the federal government buying the pipeline. "It kind of appeared that Kinder Morgan might not have thought this was such a good deal for a variety of reasons and those same concerns that Kinder Morgan and have not gone away", Stetski said.

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