OTTAWA –The federal government is spending $4.5 billion to buy the existing Trans Mountain pipeline, and will pick up the construction of the expansion after the sale is finalized.
The deal will see Canada become the owner of the cross-provincial pipeline and all of Kinder Morgan Canada’s core assets.
Kinder Morgan will continue construction on the twinning of the pipeline this summer, with financial help from the federal government through an Export Development Canada loan guarantee through the 2018 construction season.
After the sale is complete—anticipated this August—the federal government will pick up the construction before selling it to a new "long-term" owner or owners, Finance Minister Bill Morneau announced alongside Natural Resources Minister Jim Carr in an early morning press conference Tuesday.
Morneau said Indigenous groups, pension funds, and others have expressed interest in the project. He described the $4.5 billion buy-out as a “fair price for Canadians,” and said the commercial agreement is a “sound investment opportunity.”
Additional spending on construction is anticipated, but the federal ministers wouldn’t speak to what the final price tag could be. The expansion had been estimated at $7.4 billion.
The federal government will offer financial security, or indemnification against any ongoing “politically motivated delays,” to the new investors, while the Government of Alberta is offering an “emergency fund” of up to $2 billion to chip in on any “unforeseen circumstances,” according to the news release.
In a tweet, Alberta Premier Rachel Notley called the decision a “major step forward for all Canadians,” pledging not to stop until the job is done.
Notley and British Columbia Premier John Horgan have been at odds over the pipeline.
The deal also allows the federal government to step back in and re-purchase the pipeline in instances of “adverse judicial decision,” or if the new buyer cannot complete the project for other reasons.
According to a Canadian Press report, the purchase 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.
“We knew that to do energy differently in this country, we needed to act differently,” Carr told reporters Tuesday.
On Tuesday morning the federal cabinet convened on Parliament Hill to hear Morneau’s plan to move the project forward, with public money. Morneau said cabinet approved the move, which now is before the company’s shareholders.
On their way into the meeting, few members of cabinet had anything to say about the controversial energy project, other than Prime Minister Justin Trudeau who stated: “We’re going to get that pipeline built.”
This decision comes days before Kinder Morgan’s May 31 deadline to get reassurance that the pipeline can go ahead.
“We’ve found a way forward for this national interest project,” said CEO of Kinder Morgan Canada Steve Kean on a conference call with reporters Tuesday morning. He said the company will work with the federal government on finding a third-party buyer, but the Texas-based company will be paid regardless.
“We knew that to do energy differently in this country, we needed to act differently,” Carr said.
The expansion would triple the amount of oil transported from Edmonton to Burnaby, B.C., from 300,000 barrels a day to 890,000 barrels a day. The Trans Mountain pipeline has been in operation since the 1950s.
The interprovincial spat between the two NDP premiers prompted Alberta to briefly cut off B.C. wine imports and threaten to turn off the oil taps. In response, B.C. has gone to the provincial Court of Appeal to see if it has jurisdiction to regulate heavy oil shipments.
B.C. fears that a pipeline spill would be devastating for the coast, while Alberta insists that the expansion -- which already has federal approval -- is in the best interest of the Canadian economy.
Protests have taken place across Canada both for and against the pipeline. On Monday, Green Leader Elizabeth May was ordered to pay a $1,500 fine for her involvement in an anti-pipeline rally at a main gate to Kinder Morgan's pipeline terminal.
Source: CTV News