Published: Thu, May 31, 2018
Research | By Raquel Erickson

Federal Government to Buy Trans Mountain Pipeline for $4.5-Billion

Federal Government to Buy Trans Mountain Pipeline for $4.5-Billion

Kinder Morgan Canada Ltd. stock stumbled again on Wednesday after two banks cut their target share prices in the wake of the company's deal to sell its biggest current and growth asset - the Trans Mountain pipeline system - to the federal government.

Canada and Kinder Morgan agreed on a pricetag of 4.5 billion Canadian dollars ($3.5 billion), Finance Minister Bill Morneau said at a press conference Tuesday morning.

Alberta Premier Rachel Notley says a federal government plan to take over the Trans Mountain pipeline will "unlock investment" in the oil sands.

Ball says it's important for Ottawa to invest in oil and gas infrastructure to make sure those future projects can happen no matter what.

While he isn't happy about the federal government's decision to buy the pipeline project, Milobar said "it's understandable why government wants it to proceed and it will be good if the government gets it across the finish line".

Canada on Tuesday agreed to buy the pipeline for $4.5 billion (US$3.5 billion) in an effort to save a project that faces formidable opposition from environmentalists and British Columbia officials anxious the pipeline could spill its heavy oil.

"It's not the intention of the government of Canada to be a long-term owner of the project", Morneau said, adding that pension funds and indigenous groups have already expressed an interest in buying stakes in the project.

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.


But Morneau said the Alberta-British Columbia feud, which led Alberta to boycott British Columbia wines and threaten to cut the neighbouring provinces fuel supplies, "cannot be allowed to fester".

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. "They're willing to get involved", said Ball.

Meanwhile, the rally drew hundreds of Vancouverites, all opposing the Kinder Morgan purchase.

Many demonstrators are outraged with people calling the decision to use tax payer money to save the project 'ridiculous, ' reported News 1130.

The federal government insists the project falls under its jurisdiction. "We have a wonderful tradition in our county of civil disobedience up to a point where it infringes on the rights of others, and there's no reason, in my view, to think that the federal government taking an ownership position in this project and de-risking it from the standpoint of Kinder Morgan is going to impact the appetite of the protestors to have their voices heard".

Next, taxpayers are on the hook for the cost of twinning the project - an estimated $7.4 billion and climbing.

Calgary-based pollster Janet Brown said the premier should be careful not to be seen celebrating prematurely on a file - and a provincial economy - that has been bedevilled by swings and setbacks. "We support improving market access to ensure Canada achieves fair recognition and full value for its energy resources". This is not a great day for Canada's reputation on the worldwide investment front.

Canada approved the project in November 2016, following an expanded environmental review process that included additional consultations with Indigenous communities and assessing the amount of additional emissions likely to result from additional production.

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