Bill Morneau, finance minister, announced on Tuesday the government will pay Kinder Morgan 4.5 billion Canadian dollars (US$3.5bn) for the Trans Mountain pipeline.
Reactions from leaders of all industries and organizations to the federal government's announcement today (May 29) that it is buying Kinder Morgan Canada Limited's (TSX:KML) Trans Mountain pipeline have been strong.
"We are purchasing the assets; we are purchasing the existing assets, and the investment in the twinning of that pipeline, and those assets are what is required for us to move forward with the expansion", he said.
But even if the Keystone XL pipeline is built, Canada is still selling 99% of its oil to refineries in the US and that narrow market means they now get far less per barrel than they would if they had access to an alternative market.
"If Kinder Morgan could get this project built on time without major cost overruns, it would be a very valuable stretch of pipeline", says Richard Masson, a fellow with the University of Calgary's policy school and former head of the Alberta Petroleum Marketing Commission. Construction costs of the pipeline are estimated to be at $7.4-billion-funds that the liberals may have to scrap together from taxpayer dollars.
"We stopped work on this order a couple of weeks ago just because of the announcement from Kinder Morgan in (that) they weren't investing any more into it so hopefully this changes and changes rather soon for us".
While the IPO documents made clear that there was significant risk that legal and other challenges could delay or ultimately doom the project, it said even with significant cost increases and schedule delays the project should remain attractive.
Kinder Morgan had set a Thursday deadline to gain certainty over the project or abandon it altogether.
"I have always been supportive of getting a pipeline to saltwater", she said.
"Indeed, we question (parent company) Kinder Morgan Inc.'s willingness to retain Kinder Morgan Canada longer term as it only contributes about two per cent of EBITDA (earnings before interest, taxes, depreciation and amortization) and has reduced growth prospects". "This is a great day, not only for our company but for Canada", CEO Steve Kean said.
Premier Scott Moe has been a vocal backer of the project. Then sand was thrown in the gears when John Horgan was elected NDP premier of B.C.
In this case, construction of the Trans Mountain expansion-assuming a private sector buyer isn't found immediately-will be in the hands of a federal Crown corporation.
Horgan said he encouraged pipeline opponents to make their voices heard but only "within the rule of law". That is not who we are, â said Carr.
"This indemnification would allow Kinder Morgan to finish what they started - what they received federal and B.C. provincial approval to do".
The move drew immediate criticism from both sides of the political spectrum, and could hurt Trudeau's popularity in the key British Columbia battleground in a 2019 federal election. "But, this is an attempt to say, look, this thing has to be built, it's in the national interest for it to be built", de Bever said.
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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