Canadian government buys Trans Mountain project for $4.5 billion

Canadian government buys Trans Mountain project for $4.5 billion

Kinder Morgan Canada Ltd.'s shares lurched higher, then fell, after the federal government announced early Tuesday it would buy its Trans Mountain pipeline assets for $4.5 billion.

The pipeline plan has already started a war of words, litigation and legislation between the two provinces, even though, for the first time in Canadian history, both are governed by the New Democratic Party, the most left-leaning party in Canada's political mainstream.

Finance Minister Bill Morneau says once the sale is complete, Canada will continue the construction on its own, with a view to eventually selling the whole thing down the road, once market conditions would allow it to get the best price.

That decision prompted the Alberta government to call an emergency cabinet meeting to come up with a response.

Prime Minister Justin Trudeau's government has just signed up to captain the Titanic of tar sands oil pipelines, putting it on a collision course with its commitments to Indigenous rights and the Paris climate agreement. He insists there is no contradiction between fighting for the environment and defending Canada's oil industry and the economic benefits it brings.

The TMX expansion would raise the Alberta-to-B.C. pipeline's capacity to 890,000 barrels per day from its current level of 300,000 bpd and was expected to cost the company $7.4 billion.

Morneau said the government's purchase of the project "will ensure that we're able to safely get Canadian oil resources to world markets where we can get a fair price for them".

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"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".

Kean said the company will restart construction and that any activity between now and the transaction closing - which likely won't happen until August - will be funded by the federal government.

On Tuesday, B.C. Premier John Horgan vowed to continue to fight the pipeline in court.

Environmental activists and their allies among indigenous groups say the development will increase the risk of oil spills from the pipeline and from oil tankers along British Columbia's coastline.

"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. The government is buying the existing pipeline and the scheduled twinned pipeline expansion.

Meanwhile, the court cases to quash the permits for the project remain, said May.

She also said any money the province puts in will be converted to equity in the pipeline, so there should be no negative effect on Alberta's credit rating. The expansion project received federal approval in 2016.

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