Canadian government buys Trans Mountain project for $4.5 billion

Olive Hawkins
May 30, 2018

The deal between Ottawa and Kinder Morgan will see construction by the company resume until the sale is finalized, and then the federal Liberals will take over and look to sell the project to interested investors later on.

That said, if it takes federal ownership to construct a project that Kinder Morgan was unable to do, that may be sign of a broader failure in Canada - not a win.

"We are purchasing the assets; we are purchasing the existing assets, and the investment in the twinning of that pipeline, and those assets are what is required for us to move forward with the expansion", he said.

Export Development Canada will finance the purchase, which includes the pipeline, pumping stations and rights of way along the route between Edmonton and Vancouver, as well as the marine terminal in Burnaby, B.C., where oil is loaded onto tankers for export.

Steel pipe to be used in the oil pipeline construction of Kinder Morgan Canada's Trans Mountain Expansion Project sit on rail cars at a stockpile site in Kamloops, British Columbia, Canada May 29, 2018.

"Tens of thousands of depend on pristine coastal and inland waters", said Horgan.

"We've always reckoned that the Trans Mountain expansion was logical in terms of, if you build the pipeline, the volumes will flow through it".

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During a Tuesday morning press conference, Horgan said the federal government's decision to purchase the pipeline project at a cost of $4.5 billion does not change his government's courses of action.

The Trans Mountain project is created to increase capacity of the 65-year-old pipeline from Edmonton, Alberta, to Burnaby, B.C., from 300,000 to 890,000 barrels per day.

Still, the federal government approved the pipeline in November 2016, on the condition that it meet 157 conditions related to its impact on Indigenous communities, environmental impacts and myriad other areas.

Reaction to the deal is certainly mixed and coming from all parts of the country, including from British Columbia's two leading men and Rachel Notley, the premier of Alberta. He said now every Canadian is paying for it.

Facing stiff environmental opposition from British Columbia's provincial government and activists, Houston-based Kinder Morgan earlier halted essential spending on the project and said it would cancel it altogether if the national and provincial governments could not guarantee it. But it's bad news for Canadian taxpayers who will ultimately have to bear the cost.

"There is a very strong business case for this pipeline", Prime Minister Justin Trudeau told Bloomberg Television, saying the government takeover meant "a lot of the legal barriers and a lot of the challenge points actually disappear".

Canadian Association of Petroleum Producers president Tim McMillan said it was "great news" that Ottawa was prepared to "step up to clear the path to construction" and ensure Trans Mountain had full political and financial support. Canada will continue to need major pipeline projects to deliver responsibly-produced Canadian energy to markets around the world while ensuring a fair price for our resources. "I think it's important to Canada and important to our economy".

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