Canada To Buy Kinder Morgan's Trans Mountain Expansion Project

Canada to buy major pipeline to ensure it gets built

Saskatchewan Premier Scott Moe is responding to the federal Liberal government's plan to spend $4.5 billion buying Kinder Morgan's Trans Mountain pipeline and core assets.

The federal cabinet approved the purchase on Tuesday.

Federal Finance Minister Bill Morneau made the announcement from Ottawa and says the deal represents a sound investment.

Access to new oil markets was also key to Canada meeting its Paris climate target because Alberta, the nation's singled largest pollution emitter, agreed to take action against carbon emissions, if it gained access to new markets for its oil.

The finance minister says the move will "ensure" the oilsands pipeline expansion gets built.

Export Development Canada will finance the purchase, which 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.

To help attract a future buyer for the pipeline, Morneau said, the government plans to "extend the federal indemnity to protect any new owner from costs associated with politically motivated delays".

In British Columbia, Premier John Horgan said, "Tens of thousands of B.C.jobs depend on pristine coastal and inland waters. I hope this is beneficial to the Saskatchewan price we get for our energy commodities".

Indigenous leaders, who have been at the forefront of a grassroots campaign against the Trans Mountain project, have vowed that the pipeline "will never be built".

Horgan said his province will continue to seek a legal remedy to stop the expansion. He said now every Canadian is paying for it.

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.

At this point, both the federal and Alberta government will offer financial security, or indemnification against any ongoing political risk, to the new investors.

"Prime Minister Justin Trudeau is making a historic mistake in buying the doomed Kinder Morgan project", Adam Scott, senior adviser at Oil Change International (OCI), said in a statement denouncing Trudeau's decision, which comes just weeks after fierce opposition from Indigenous groups and environmentalists forced the oil giant to halt construction operations.

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.

A majority of Canadians support the pipeline, according to recent polls, but they are reluctant to see tax dollars used to support it. If Alberta simply upgraded what it sent through the Trans Mountain pipeline into oil, the existing pipeline's capacity, as well as that of all other pipelines that service the oil sands, could be boosted by a third. Canada will continue to need major pipeline projects to deliver responsibly-produced Canadian energy to markets around the world while ensuring a fair price for our resources.

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