Canadian government to buy pipeline project from Kinder Morgan for $4.5bn

Terry Joseph
May 30, 2018

In an act of "immense moral cowardice" that once again betrays his expressed commitment to helping confront the global climate crisis, Canadian Prime Minister Justin Trudeau announced on Tuesday that his government will purchase Kinder Morgan's "climate-destroying" Trans Mountain pipeline for $4.5 billion.

"We believe this is the best way to protect thousands of well-paying jobs and the safest and most effective way to get our resources to world markets", Morneau told a news conference in Ottawa after the meeting, Natural Resources Minister Jim Carr at his side. During or following construction of the expanded pipeline, which is expected to take about 2.5 years to complete, Canada will monitor the markets and seek out future investors interested in taking on the entire project once it is done.

Canada needs projects like the expansion created to triple Trans Mountain's capacity to move crude oil and refined products from the Alberta oilsands and Edmonton refining complex to the West Coast, said Chris Bloomer, CEO of the Canadian Energy Pipeline Association.

The pipeline connects oil sands facilities near Edmonton, Alberta, to tanks in Burnaby, near Vancouver on Canada's west coast. While in Alberta's case the goal is getting oil to tidewater, in Newfoundland and Labrador it's removing barriers to offshore oil and gas development. "We won't stop until the job is done!"

Analysts have said China is eager to get access to Canada's oil, but largely gave up hope that a pipeline to the Pacific coast would be built.

Under the plan, revealed Tuesday by federal Finance Minister Bill Morneau, Kinder Morgan will go ahead with its original plan to twin the pipeline this summer while the sale is finalized.

What's more, as Alberta's Parkland Institute points out, the Trans Mountain expansion was conceived at a time when there were fewer pipelines bringing tar-sands oil to market. "We'll probably be able to roll out those details, that information, a bit more in the days to come but I'm not going to do it today", said Notley, who noted the province may end up putting no money toward the project.

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The government will also offer federal loan guarantees to ensure construction of the expansion continues through the 2018 season as part of the deal with the company, a unit of Houston-based Kinder Morgan Inc (KMI.N).

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.

"The majority of Canadians support this project".

Presumably, the cost to the new owners - us - will be about the same.

"We have agreed to a fair price for our shareholders", said Steve Kean, chief executive officer of Kinder Morgan Canada and Kinder Morgan Inc.

Canada's oil sector has been stung in the past year as foreign energy companies retreated amid concerns about the environmental toll, high production costs and a risky regulatory regime.

"Trudeau is gambling billions of Canadian taxpayer dollars on an oil project that will never be built", Mike Hudema, a climate and energy Campaigner at Greenpeace Canada, declared in a statement on Tuesday.

Other reports by Free-Prsite

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