Federal government spending $4.5B to buy Trans Mountain pipeline, BC terminal

Federal government spending $4.5B to buy Trans Mountain pipeline, BC terminal

Federal government spending $4.5B to buy Trans Mountain pipeline, BC terminal

Canada will buy Kinder Morgan Canada Ltd's (KML.TO) Trans Mountain pipeline for C$4.5 billion ($3.5 billion), the government said on Tuesday, hoping to save a project that faces formidable political and environmental opposition.

Financing for this purchase will come from Export Development Canada.

Finance Minister Bill Morneau believes Canada's authority to build the pipeline will be able to overcome any resistance, be it from protesters or the B.C. government. She also invoked other pipeline projects that have faced opposition, such as TransCanada's Energy East pipeline project that was cancelled previous year.

"It's outrageous that Trudeau is using public funds to bail out a multinational corporation when we would create more jobs by investing in building a clean-energy economy instead", Caitlyn Vernon, campaigns director of Sierra Club BC, told the Vancouver Sun.

Saskatchewan's premier says he is "cautiously optimistic" and hopeful Ottawa's plan to purchase the Trans Mountain pipeline for $4.5 billion works. It does not intend to own the project for long. Steven J. Kean, the president of Kinder Morgan, called it a "great day for Canada, for our customers and for our employees".

"It's a mess out there", said a Calgary industry source not authorized to speak publicly.

But even if the Keystone XL pipeline is built, Canada is still selling 99% of its oil to refineries in the US and that narrow market means they now get far less per barrel than they would if they had access to an alternative market.

Many indigenous people see the new pipeline as a threat to their lands, echoing concerns raised by Native Americans about the Keystone XL project in the US.

The pipeline has become a flash point for a wider debate in Canada over the environmental impact of tapping Alberta's oil sands, which critics view as a particularly polluting energy source. "We've agreed to a fair price for our shareholders and found a way forward for this national interest project".

Kean did not say why he made a decision to sell rather than absorb the risk of further delays. It does not matter who owns the pipeline.

"I think the transaction is a win-win".

Delays had been costing Kinder Morgan $75 million a month.

That said, if it takes federal ownership to construct a project that Kinder Morgan was unable to do, that may be sign of a broader failure in Canada - not a win.

Notley held a jubilant news conference in front of the legislature in Edmonton after the federal government announced it is buying the 65-year-old oil pipeline from Alberta to the B.C. coast. Like their national counterparts, the province's Greens adamantly oppose the Trans Mountain pipeline. Alberta threatened to halt crude and fuel shipments to British Columbia, where consumers already pay high gasoline prices, and briefly halted imports of the coastal province's wines.

Reaction to the deal is certainly mixed and coming from all parts of the country, including from British Columbia's two leading men and Rachel Notley, the premier of Alberta. The contribution will convert into equity in the pipeline.

"I will continue to work for the people of British Columbia, with the full force of my efforts within the courts and within the rule of law".

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