Ottawa Buying Trans Mountain Pipeline Assets for $4.5 billion

Ottawa Buying Trans Mountain Pipeline Assets for $4.5 billion

Pablo Tucker
May 31, 2018

Kinder Morgan Canada Ltd. stock stumbled again on Wednesday after two banks cut their target share prices in the wake of the company's deal to sell its biggest current and growth asset - the Trans Mountain pipeline system - to the federal government.

Morneau says it is not the Government of Canada's intent to be a long-term owner of the pipeline and it will work with investors to transfer the project and related assets to a new owner to ensure the project operates in the public's interest.

"For sale: Stalled and collapsing pipeline project", reads the title of a Craigslist ad, posted May 29. Its expansion is a key part of Canada's effort to boost oil exports to Asian markets - but the plan has been protested by indigenous groups and environmental activists, who warn of the risks of a spill and the hazards of increased petroleum tanker traffic.

"Keep in mind Kinder Morgan wanted to build this, with zero taxpayer dollars, but they were getting so much resistance and the government was doing nothing to try to get the provinces on board or to introduce legislation to move things ahead", said Gladu. While other world leaders chart their path to a 100-per-cent renewable energy future, Canada's "sunny ways" prime minister bought a dirty oil pipeline to one of the largest carbon bombs on the planet.

But the finance minister has been pressed on the possibility that future costs could well exceed that number, as the company has previously pegged the total expansion cost at $7.4 billion. While we are going to save the vital pipeline and the thousands of jobs that come with it, today's decision highlights how much damage has been done to our global reputation. BC's opposition had almost killed the project...and still might finish it off despite the gamble by the federal government to nationalize the pipeline system.

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 main obstacles to this deal have always been political, not economic", Wudrick said. "We get value out from money in and that's why we think this is a good opportunity".

"I said to the Prime Minister that ownership of the project doesn't change my concerns", said B.C. Premier John Horgan.

Notley said the federal takeover gives the project "federal Crown immunity", which casts doubt on B.C.'s reference case to test the province's jurisdiction. While he didn't elaborate on what that actually means, his comment suggests the Trans Mountain Expansion is not moving forward anytime soon.

"But the fact that our federal government had to step in proves there's still deep uncertainty around investing in Canada".

At that time, Kinder Morgan Canada was expecting to begin construction on the expansion in September 2017 and for it to be operational by late 2019.

The move has prompted criticism on the cost that Canadian taxpayers could face.

On Tuesday, Ottawa repeated its promise to provide indemnification "to protect any prospective new owner from costs associated with political delays".

Canada approved the project in November 2016, following an expanded environmental review process that included additional consultations with Indigenous communities and assessing the amount of additional emissions likely to result from additional production.

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