Canada to buy major pipeline to ensure it gets built

Gwen Vasquez
May 29, 2018

The Liberal Government announced it has agreed to purchase the Trans Mountain Pipeline system and the expansion project (TMEP) for $4.5 billion from Kinder Morgan.

The ensuing uncertainty, paired with vociferous opposition from environmental groups and some Indigenous communities in B.C., prompted Kinder Morgan to halt investment until the federal government could inject some certainty into the project. "It must be built and it will be built", Morneau said.

John Horgan, British Columbia's premier, has asked a court to determine whether the province has jurisdiction over the pipeline, vowing to block the expansion if the court says yes.

Shares of Calgary-based Kinder Morgan Canada, a unit of the Houston-based parent, surged as much as 9 per cent after the announcement, and were down 28 cents, or 1.69 percent, to $16.31 at 12:27 Toronto. It will be a key test of Trudeau's bid to balance the environment and the economy by backing the C$7.4 billion pipeline expansion while pushing a national carbon price to reduce greenhouse gas emissions.

The pipeline deadline is just one of two big dates coming for the Trudeau government this week, which could turn out to be one of the most important of his first mandate as prime minister, especially if he wants a second one.

May said Indigenous rights were not being respected in regards to the permits issued to twin the existing pipeline.

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"This is an investment in Canada's future", he said.

If completed, Trans Mountain would "triple the amount of dirty tar sands being shipped from Alberta to the coast of British Columbia", OCI's Andy Rowell noted in a blog post last week.

Do you support the federal government's purchase of Trans Mountain?

Mr Morneau said the deal with Kinder Morgan is likely to be closed by August 2018.

"At the appropriate time, Canada will work with investors to transfer the project and related assets to a new owner or owners, in a way that ensures the project's construction and operation will proceed in a manner that protects the public interest", reads a release.

Kinder Morgan, the company behind the pipeline, suspended non-essential spending on the project in April. The 980-kilometre (600-mile) expansion is seen by the oil industry as a crucial link to Asian markets, allowing producers to diversify away from the US, which takes the vast majority of Canadian oil exports.

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