Canadian government to buy troubled Trans Mountain pipeline

Canadian government to buy troubled Trans Mountain pipeline

Canadian government to buy troubled Trans Mountain pipeline

The federal Liberal government has no plans to drag Canada permanently into the pipeline business, Finance Minister Bill Morneau said Tuesday as he unveiled a $4.5-billion plan to buy the Trans Mountain pipeline and its various assets to ensure a planned expansion is able to proceed.

Federal Finance Minister Bill Morneau made the announcement from Ottawa and says the deal represents a sound investment.

The report said a lack of investment in the energy sector is a contributing factor.

To help attract a future buyer for the pipeline, Morneau said, the government plans to "extend the federal indemnity to protect any new owner from costs associated with politically motivated delays".

The purchase price includes most of Kinder Morgan Canada's core assets - the existing pipeline, the pumping stations and rights of way, and the Westridge marine terminal in Burnaby, B.C.

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.

"Whether she wins (the election) that's another story, but had this not happened, she was toast", said Bratt, a political scientist at Mount Royal University in Calgary.

Indigenous leaders, who have been at the forefront of a grassroots campaign against the Trans Mountain project, have vowed that the pipeline "will never be built".

The counter argument, of course, is that they are needed urgently now, so Canadian producers won't have to sell to USA refineries at a major discount to WTI because of pipeline bottlenecks, and instead could tap more global markets.

"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. "It will begin to reduce our reliance on one customer and enable Canadians to get a fairer price for their natural resources".

The project, which is expected to cost $7.4 billion to build, would triple capacity of a pipeline traveling from the oilsands of Alberta to the coast of British Columbia but has been beset by political and environmental opposition.

Eric Nuttall, senior portfolio manager at Ninepoint Partners, reacts to the federal government's announcement that it will be buying the controversial Trans Mountain pipeline from Kinder Morgan Canada.

The two western provinces have been sparring over the pipeline, a situation that Mr Morneau said can not be allowed to "fester". The overwhelming majority of Canada's oil exports are sold to American refiners at a discount to worldwide benchmarks, reducing fuel prices for American consumers and income for Canadian producers.

Ottawa has the constitutional authority to build interprovincial projects like pipelines, but Premier John Horgan has gone to court to get a judge to weigh in on whether B.C.'s jurisdiction for the environment would allow him to regulate what flows through the pipeline. The project has been held up by local resistance, and Kinder Morgan announced in April that it would halt spending on the project due to opposition from British Columbia's provincial government.

Canada only has two options for selling that oil. The oil continues to be shipped here by rail bed.

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