Federal Government to Buy Trans Mountain Pipeline for $4.5-Billion
May 30 2018 by Michele Stevens
Morneau said Ottawa is buying Kinder Morgan's existing pipeline, and the rights and assets associated with the planned expansion, calling $4.5 billion a "fair price" for a project with "significant commercial value".
Canada and Kinder Morgan agreed on a pricetag of 4.5 billion Canadian dollars ($3.5 billion), Finance Minister Bill Morneau said at a press conference Tuesday morning.
"The Prime Minister expressed appreciation for Premier Notley's continued support for the project, and confirmed that the agreement will guarantee the resumption of work for the summer construction season and protect thousands of jobs", said the Prime Minister's Office, in a release.
"Governments do a lot of things right, but running businesses is probably not near the top of the list", Wall said.
One man said he thought the project would be profitable for Canada. "Given it will be stuck in court for a while, I don't think we will see this pipe built anytime soon". They said more oil-by-rail shipments would be necessary.
Morneau presented the purchase options during an early-morning cabinet meeting Tuesday before ministers signed off on the chosen option, which comes just days before the company's self-imposed May 31 deadline and is still subject to the approval of Kinder Morgan shareholders.
Trudeau also spoke with BC Premier John Horgan following today's pipeline decision. The cost? $4.5 billion in taxpayers money.
The pipeline connects oil sands facilities near Edmonton, Alberta, to tanks in Burnaby, near Vancouver on Canada's west coast.
So while Kinder Morgan won't be owning it any more after the purchase closes at the end of July, they'll be supplying the talent to build it, at least in the short term. "The need for federal tax payers to purchase this project have exposed fundamental flaws in the regulatory systems at all levels of government".
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"This allows us to get rid of the political risk around [the pipeline] because we [are imposing] federal jurisdiction over the project", he said.
"It seems completely insane", May said.
Moe wants to know how the federal government, in partnership with Alberta, owning the project will change the B.C. government's continued opposition to the project.
The fact the federal government needed to buy Trans Mountain to ensure the project goes ahead does not bode well for the industry, said Chris Bloomer, CEO of the Canadian Energy Pipeline Association.
If Canada indeed ends up buying the pipeline, it will be exclusively to ensure its capacity can be tripled, allowing Canada to find new export markets for its oil resources, Morneau said - and that ultimately, the long-term goal will be to find a private-sector buyer to take it over.
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.
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. They have also asked the court to reopen its evidentiary record, more than six months after hearings concluded, to consider new evidence uncovered by a National Observer investigation that revealed public servants were instructed to find a way to approve the project before the government had concluded consultations with First Nations.
While Ottawa's move is notionally positive for Canadian oil producers, the nationalization of key infrastructure is unlikely to boost investment confidence in Canada, noted GMP First Energy analyst Robert Fitzmartyn.