Monday, 17 December, 2018

Ottawa Buying Trans Mountain Pipeline Assets for $4.5 billion

Pipes are seen at the pipe yard at the Transmountain facility in Kamloops B.C. Monday Pipes are seen at the pipe yard at the Transmountain facility in Kamloops B.C. Monday
Theresa Hayes | 30 May, 2018, 05:39

The federal government announced a plan Tuesday to spend $4.5 billion on buying the Trans Mountain pipeline and most of current owner Kinder Morgan Canada's other assets in order to ensure a plan to twin the pipeline is allowed to proceed.

Instead, an energy company which has followed the rules in good faith, spent almost a billion dollars in development and undergone exhaustive vetting to win regulatory approval has been impeded at every turn by opponents, including the government of British Columbia and the cities of Burnaby and Vancouver with what amount to nuisance court actions, given how Kinder Morgan has so far won 16 of these legal challenges in a row.

The issue has divided two Canadian provinces, pitting Alberta's government against leaders in British Columbia.

The deal for the bulk of the Canadian subsidiary of Texas-based Kinder Morgan Sale proceeds are about $12 per share after capital gains taxes, he said.

"The Indigenous-led, people-powered movement that led Kinder Morgan to abandon ship on this project is stronger than ever and will not back down". But the pipeline faces strong opposition in British Columbia, particularly in the Vancouver area.

Morneau has already unveiled the third option: leaving original project architect Kinder Morgan to handle construction, but covering any cost overruns incurred as a result of political interference.

The Canadian pipeline industry welcomed news Tuesday that the Trans Mountain expansion pipeline is more likely to be built, but expressed grave misgivings over the federal government's decision to buy both the expansion and the existing line in order to achieve that goal.

Once the sale to the feds is complete, Canada will continue the construction on its own, with a view to eventually selling the whole thing down the road, once market conditions would allow it to get the best price.

Discussing the plan on Tuesday, Finance Minister Bill Morneau said the government acted to remove political uncertainty and ensure the project goes forward as the summer construction season nears.

Horgan continued to say that it doesn't matter who owns the pipeline, what matters is defending the province's coast, lands, rivers and streams from the impact of a dilbit spill. The decision is the culmination of a months-long battle between B.C.'s NDP government, the Alberta NDP government and the federal government. "When we have something to announce you can be sure we will announce it".

Alberta has also agreed to provide funding for any unexpected costs that arise during construction.

The B.C. government is still fighting the project in court.

The government was immediately slammed from all sides for its stunning move.

But without the bail out, as then Finance Minister Jim Flaherty said privately at the time, "GM and Chrysler would have left Canada". "Worst of all, the cost and risk of a $7 billion project that was going to be willingly financed entirely by a private company will now be unnecessarily transferred onto the backs of Canadian taxpayers".

The rest of the world is transitioning away from fossil fuels, said Weaver.

That stands in contrast to forecasts from climate groups, which predict that demand for Canadian oil will diminish in coming years as countries move towards their Paris accord commitments to reduce carbon emissions, and the Trans-Mountain pipeline could prove to be a waste of resources.

Ottawa is pressing ahead, firmly of the opinion there is no doubt about its jurisdiction.

Analysts also said the approval of other pipelines, including Trans Mountain and Keystone XL, weakened the business case for Energy East.

"If you think about the dozens of pipelines that exist for crude oil, natural gas liquids, natural gas itself, petroleum products, all throughout the USA and Canada - and we track this stuff - I'm not aware of a single one that's owned by any government entity. not on this scale".

Alberta Premier Rachel Notley was much happier about today's announcement, which she showed through a series of tweets throughout the morning.

"The Trans Mountain expansion project is of vital interest to Canada and to Canadians", Morneau told a news conference in Ottawa.