Canada to buy Kinder Morgan pipeline project assets

Cristina Cross
May 30, 2018

Canada's government has said it is buying a controversial pipeline expansion project to ensure it gets built in the face of stiff opposition from environmental activists and a regional government.

Under the proposed federal plan, the Trans Mountain pipeline will be placed under the stewardship of a new Crown corporation and Ottawa will divest itself of the project at a later date.

The Federal government has reached an agreement with Kinder Morgan to buy the Trans Mountain pipeline & related infrastructure for $4.5-billion.

The company halted all non-essential spending on the pipeline expansion in April pending reassurances from Ottawa that the project would come to fruition.

And the bill for taxpayers won't be $4.5 billion as Morneau claims, but much closer to $20 billion, says economist Robyn Allan.

"We need to deal with the political uncertainty", he said.

So instead of settling these jurisdictional issues or enforcing its will, the Trudeau government has chose to spend its way out of trouble.

Although the federal government has taken stakes in struggling energy projects, Tuesday's announcement marked the first time Ottawa has bought an entire pipeline.

He says Kinder Morgan will proceed with its plan to twin the pipeline this summer while the sale is completed. "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 risky, unwanted pipeline with public money".

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The pipeline purchase would also transfer to the federal government all of the people involved in building the expansion, including project managers and construction workers. Canada's long-term plan is to finance the costs of construction through the paid contracts with oil producers to ship their oil through the pipeline, and recoup its investment through an eventual sale. "So the additional investments will be dealt with in that way", Morneau said. Existing statutes stipulate one level of government can not interfere with the work of another - a situation one official called a "conversation changer" that might convince Horgan to back down.

"This is a critical project that should have been built and owned by the private sector".

Morneau stressed repeatedly the pipeline is commercially viable and profitable. "I think that's been reinforced by the fact that Kinder Morgan was able to build up through different open seasons to a high level of commitment (from shippers)", he said.

The Alberta government has agreed to cover any unexpected costs that arise during construction. Kean is also CEO of Kinder Morgan, Inc., the Houston-based firm that owns 70 per cent of the Canadian firm. "It polarized us. That is not who we are", Carr told the news conference.

Moe has repeatedly said the federal government should do more to ensure the project gets built and charged they have "no clear plan" to do so. And let's not forget 2009, when the federal and Ontario governments spent more than $13 billion to bail out North American auto makers.

"I continue to have concerns about the potential adverse consequences of a diluted bitumen spill on our marine environment, on our coast and the consequences to our economy", he said. They are led by British Columbia, which is trying to stop the pipeline development in the courts on environmental grounds.

Alberta Premier Rachel Notley, however, could barely contain her delight.

The transaction could further "galvanize opposition" from special interest groups while complicating the government's ability to provide protection over construction in the Lower Mainland of B.C., including its willingness to call in the RCMP if needed, they said.

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