Published: Tue, May 29, 2018
Research | By Raquel Erickson

Federal government spending $4.5B to buy Trans Mountain pipeline, BC terminal

Federal government spending $4.5B to buy Trans Mountain pipeline, BC terminal

"The federal government has reached an agreement with Kinder Morgan to purchase the existing Trans Mountain pipeline, and infrastructure related to the Trans Mountain expansion project", Bill Morneau, the finance minister, told reporters.

Kinder Morgan last month gave Ottawa an ultimatum: Chairman Steve Kean said the company would suspend all work on the expansion project entirely if the legal issues surrounding it can not be resolved by May 31, adding that it would not continue risking shareholder funds on the project unless the clouds over it clear.

The two western provinces have been sparring over the pipeline, a situation that Mr Morneau said can not be allowed to "fester". The expansion had been estimated at $7.4 billion.

Numerous indigenous groups also oppose the project, though a number of First Nations have signed on to the expansion project. However, at present, there is only one pipeline from the tar sands region to the port in Vancouver and that pipeline was built in 1953. Trudeau is gambling billions of Canadian taxpayer dollars on an oil project that will never be built - a project that Kinder Morgan itself has indicated is "untenable" and that faces more than a dozen lawsuits, crumbling economics, and a growing resistance movement that is spreading around the world. The company has a market value of $5.8 billion.

When the sale is finished, Canada will continue construction on its own, with plans to eventually sell it all in the future once market conditions improve.

Do you support the federal government's purchase of Trans Mountain?

It's actually better for Kinder Morgan than it is for Canada. The company also said it still has a strong set of midstream assets in Canada and that the Trans Mountain sale will help its Edmonton terminals business.

The Trans Mountain expansion would nearly triple capacity to 890,000 barrels of oil on a line running from Alberta to a terminal near Vancouver.

Kinder Morgan set the deadline in part due to frustrations with delays caused by the British Columbia government, which is concerned about possible oil spills. The 980-kilometre (600-mile) expansion is seen by the oil industry as a crucial link to Asian markets, allowing producers to diversify away from the USA, which takes the vast majority of Canadian oil exports. "That's a big question", said Bloom. "Did they overpay? Maybe".

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