Canada Buys Trans Mountain Oil Pipeline, To Ensure It Gets Expanded

30 May, 2018, 22:22 | Author: Dwayne Harmon
  • Canada purchases Trans Mountain pipeline project for $4.5B

Finance Minister Bill Morneau's "don't worry, be happy" approach relies on saying there are plenty of investors who will be prepared to take the pipeline off Ottawa's hands once it is built.

"The finance minister is responsible for the decisions he made today, and he'll be accountable for that".

The purchase price includes most of Kinder Morgan Canada's core assets - the existing pipeline, the pumping stations and rights of way, and the Westridge marine terminal in Burnaby, B.C.

"It's critical for all of Canada", said Spruce Grove Mayor Stuart Houston, one of about 10 Edmonton Metropolitan Region Board members at a media event in favour of the development.

The government does not intend to be the long-term owner of the pipeline, however, and has already begun speaking with interested parties about transferring ownership later on.

Alberta Premier Rachel Notley was applauded by her staff and caucus after a news conference Tuesday on the federal government's purchase of the Trans Mountain Pipeline.

She says now that the feds are buying the pipeline, "they have a form of Crown immunity, which actually limits the degree to which provincial laws would apply to the project because it's a federal project now".

He added Ottawa shouldn't have to nationalize the project just to get it built.

The federal Liberal government has agreed to buy the troubled Trans Mountain expansion project from Kinder Morgan to ensure the controversial expansion of an Alberta-to-B.C. crude oil pipeline gets built.

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

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Canadian pension funds, Indigenous groups and others have expressed interest in the project, Morneau said.

The $4.5-billion purchase price does not cover the construction costs of building the new pipeline, however; Morneau refused to say what that cost may be.

If B.C. Premier John Horgan and Green leader Andrew Weaver thought Trudeau might fold on this file, they have misjudged the prime minister's mettle, as well as his analysis of the electoral map.

"In a single mandate, Justin Trudeau transformed from a climate champion into a Big Oil CEO", said Aurore Fauret, a campaigner with 350.org.

Ottawa is pressing ahead, firmly of the opinion there is no doubt about its jurisdiction. That reputation now lies in tatters and we now learn that only the government, using captive taxpayers as bankers, can complete this project.

The lawsuits seeking to block the project and seeking clarification of jurisdiction are still before the courts. Trudeau will lose some seats in the Lower Mainland and Vancouver Island but those defeats will be more than offset by wins in the B.C. Interior and elsewhere in Western Canada, where Trudeau will be able to say that Vancouver and Victoria don't get to decide what's good for the rest of Canada.

The time is not right for either company to take on a project like Trans Mountain, said Laura Lau, who helps manage C$1.5 billion in assets, including shares of TransCanada and Enbridge, at Brompton Corp.in Toronto.

But when even the prime minister of Canada doesn't understand that reality, the end result is economic disaster.

The counter argument, of course, is that they are needed urgently now, so Canadian producers won't have to sell to US refineries at a major discount to WTI because of pipeline bottlenecks, and instead could tap more worldwide markets. A lack of capacity in pipelines or in rail cars to ship oil produced in Alberta is also hurting Canada's energy sector.

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