Canada to Buy Kinder's Trans Mountain Pipeline for $3.5 Billion


Pressed about why the federal government's $4.5-billion price tag was so much lower than Kinder Morgan's stated $7.4-billion project value, Morneau said Ottawa was purchasing all the relevant assets - but he studiously avoided saying whether construction would increase costs.

Scheer said the prime minister was cutting a cheque with taxpayers' money for "shareholders in a Texas-based company", while at the same time claiming he wants to attract investment in Canada.

He hinted, however, that there would be additional costs, to be defrayed by the revenue generated by the pipeline itself.

"(The expansion project) went through extraordinary reviews and was approved by the government of Canada 18 months ago", he said.

Alberta's oil industry has seen its attempts to have other pipeline projects built sunk by regulatory and political opposition, including cross-border projects such as Keystone XL, still stalled because of opposition in Nebraska and South Dakota.

While the Canadian government says it does not plan to be the long-term owner of the pipeline, its decision to purchase the project on Tuesday is part of an effort to ensure the massive pipeline expansion proceeds this summer as planned. "We are going to get that pipeline built", Trudeau said Tuesday morning as he headed into a meeting with his cabinet.

The Liberal government has chose to resolve the Kinder Morgan pipeline deadlock by buying the pipeline outright.

The pipeline purchase would also transfer to the federal government all of the people involved in building the expansion, including project managers and construction workers.

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The company halted all non-essential spending on the pipeline expansion in April pending reassurances from Ottawa that the project would come to fruition. "The only (way) in our estimation that that can be done is through exerting our jurisdiction by purchasing 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.

"If you think about the dozens of pipelines that exist for crude oil, natural gas liquids, natural gas itself, petroleum products, all throughout the USA and Canada - and we track this stuff - I'm not aware of a single one that's owned by any government entity ... not on this scale".

"This move sets a awful precedent and signals to other prospective investors that large projects such as pipelines can not be built by private industry in Canada", said Aaron Wudrick, federal director of the Canadian Taxpayers Federation.

Caisse Chief Executive Officer Michael Sabia told reporters last week in Montreal that the Kinder Morgan investment was made prior to the pension fund announcing a new strategy in October to reduce its holdings in carbon-intensive industries in favor of renewable energy.

He said the government's announcement does not assuage these concerns, but that he would rather deal with the federal government than a private corporation. On the heels of Trudeau's announcement, the Vancouver-based Indigenous rights group Coast Protectors scheduled a rally for Tuesday evening to "say no to Trudeau's pipeline buy out".

Medicine Hat-Cardston-Warner MP Glen Motz weighed into the debate over the federal governments plans to buy out the Kinder Morgan pipeline project.

In British Columbia, Premier John Horgan said, "Tens of thousands of depend on pristine coastal and inland waters". Those costs would be covered either directly or indirectly through reimbursement by the Canadian taxpayer. But Ottawa will immediately seek new buyers in the private sector and has promised to also extend insurance to them for any politically-motivated delays.