Making sense of the Trans Mountain nonsense

Alicia Cross
May 30, 2018

The federal government announced a plan Tuesday to spend $4.5 billion on buying the Trans Mountain pipeline and most of current owner Kinder Morgan Canada's other assets in order to ensure a plan to twin the pipeline is allowed to proceed.

The federal finance minister said the government does not plan to be the long-term owner of the pipeline and expects the project to be transferred to private sector investors "at an appropriate time".

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 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. "If the Federal Court Of Appeal rules that the permits were granted illegally, they were granted illegally to Kinder Morgan or the federal government".

"Tens of thousands of B.C.jobs depend on pristine coastal and inland waters", said Horgan.

Terry Marshall, Moody Investors Service's senior vice-president, said the sale was a credit positive for the parent company as it removes the significant risk attached to the expansion, and eliminates at least $6.4 billion - before potential cost overruns - of additional capital to complete the project.

Now 99 percent of Canada's oil is sold to the United States at a discount, and access to the Pacific coast is seen as key to diversifying the world's sixth largest oil producer's energy exports.

Under the agreement between the federal government and Kinder Morgan, the company would resume construction on the project, which was put on hold in April.

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.

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The crown will use the expertise and management of the employees acquired from Kinder Morgan to get the pipeline built.

The Alberta government responded with a short-lived ban on the import of B.C. wines, and the passing of Bill 12, legislation that would allow the Alberta government to "turn off the taps" for oil imports to B.C. "This is a sad day for British Columbia".

Mr. Horgan said Mr. Trudeau's commitments to reconciliation with Indigenous peoples are coming to an unavoidable conflict with this pipeline. Two new pipelines were built to the United States under former prime minister Stephen Harper: TransCanada's Keystone pipeline to Nebraska (not to be confused with Keystone XL), and Enbridge's Alberta Clipper to Wisconsin.

Notley added: "This is the most certainty this project has ever had".

Prime Minister Justin Trudeau has maintained that Kinder Morgan's Trans Mountain pipeline expansion is in the national economic interest.

"Canada stands to sacrifice its global reputation, irreplaceable iconic species like the Southern resident Killer Whales, and its commitments to meet its Paris Climate targets and to reconcile with Indigenous people - all while putting enormous risk on Canadian taxpayers". A lack of capacity in pipelines or in rail cars to ship oil produced in Alberta is also hurting Canada's energy sector.

His Liberals face a hard balancing act in trying to champion climate action while supporting growth in Canada's oil sector.

Still, the federal government approved the pipeline in November 2016, on the condition that it meet 157 conditions related to its impact on Indigenous communities, environmental impacts and myriad other areas.

Other reports by Free-Prsite

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