Canada's Government Buys Controversial Oil Pipeline, To Ensure It Gets Expanded

Audrey Hill
May 30, 2018

The Canadian government has announced it will buy Kinder Morgan's Trans Mountain pipeline project for C$4.5bn ($3.5bn US) - but does not intend to be the long-term owner of the project, which has faced fierce environmental opposition.

The deal needs to be approved by Kinder Morgan shareholders. "At a critical moment in history, the government is indeed doing "whatever it takes" to undermine our transition to a safe, clean, renewable energy future".

"It's the kind of epic disaster of the last century I couldn't imagine a modern government doing, but that's exactly what we are doing", May said.

Alberta Premier Rachel Notley says she sees no immediate need to turn off the oil taps to British Columbia now that the federal government is taking over the Trans Mountain pipeline expansion.

The purchase will be financed by Export Development Canada and includes; the pipeline, pumping stations, the marine terminal in Burnaby, B.C. and rights of way along the pipeline between Edmonton and Vancouver.

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.

In British Columbia, Premier John Horgan said, "Tens of thousands of B.C.jobs depend on pristine coastal and inland waters".

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"We'll get that pipeline built", Prime Minister Justin Trudeau told reporters as he headed into a cabinet meeting.

Pressed about why the federal government's $4.5-billion price tag was so much lower than Kinder Morgan's stated $7.4-billion project value, Morneau said Ottawa was purchasing all the relevant assets - but he studiously avoided saying whether construction would increase costs. Most of it is raw bitumen, which is why roughly one-third of what flows through the Trans Mountain pipeline must be diluent for the fuel to flow. "The federal government has responded and that's their business", Horgan said. The move ended weeks of speculation sparked by Kinder Morgan's threat to abandon a project facing "unquantifiable risk" as the British Columbia government vowed to use every tool to block it.

The Alberta government also has pledged a contingency fund of up to about $1.5 billion to provide emergency funds to the project if unforeseen circumstances arise. But over the past 30 years, the Canadian government has launched a major privatization effort, selling Air Canada, Canadian National Railway and Petro-Canada. A lack of capacity in pipelines or in rail cars to ship oil produced in Alberta is also hurting Canada's energy sector. "It polarized us. That is not who we are", Carr told the news conference.

Despite his vocal support for the project, Moe said Saskatchewan will not pick up the tab for any construction costs because the project carries Alberta oil.

With the pipeline now under federal control, Horgan was asked about where his government challenge goes from here.

As for serving the broader national interest, as the Finance Minister claims, Canada's strategic interests do not rest with feeding more cheap feedstock to U.S. West Coast refineries and then buying back refined products at a huge price spread.

Other reports by MaliBehiribAe

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