Published: Tue, May 29, 2018
Sci-tech | By Carrie Guzman

Canada purchases Trans Mountain pipeline project for $4.5B

Canada purchases Trans Mountain pipeline project for $4.5B

The plan announced Tuesday has several stages - construction will continue this year with a Federal loan guarantee as the deal is finalized; the government will look for a new owner or owners to transfer the project to; and then "indemnify" the owner against certain costs. The federal cabinet approved the purchase on Tuesday.

The company's announcement ramped up the fight over the contentious project, which has pit the federal government and the landlocked province of Alberta against BC.

Canada and Kinder Morgan agreed on a pricetag of 4.5 billion Canadian dollars ($3.5 billion), Finance Minister Bill Morneau said at a press conference Tuesday morning.

Calgary-based Kinder Morgan Canada, a unit of the Houston-based parent, was little changed at C$16.59 in Toronto trading Monday, for a market value of C$5.76 billion.

Numerous indigenous groups also oppose the project, though a number of First Nations have signed on to the expansion project.

"We think obviously this is very constructive for Kinder and for Canada and clearly for Canadian producers in particular because it creates a lot of regulatory certainty over the time that the Trans Mountain expansion can get done", Katie Bays, an analyst with Height Securities LLC in Washington said in a telephone interview.

A new Crown corporation will manage the project.

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The two western provinces have been sparring over the pipeline, a situation that Mr Morneau said can not be allowed to "fester".

After her arrest, May said permits issued for the twinning of the existing Trans Mountain pipeline did not respect the rights of Indigenous people.

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.

The pipeline's nationalization opens Liberal Prime Minister Justin Trudeau to political risk.

Kinder Morgan set the deadline in part due to frustrations with delays caused by the British Columbia government, which is concerned about possible oil spills.

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

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