Features, canada, infrastructure, energy

By OMX | May 29, 2018

Coming just two days before Kinder Morgan's May 31 deadline, Finance Minister Bill Morneau and Natural Resources Minister Jim Carr announced details of a $4.5 billion deal with Kinder Morgan this morning. The federal Liberal government will buy the Trans Mountain pipeline and all of Kinder Morgan Canada‚Äôs core assets for $4.5 billion.

Morneau reiterated Prime Minister Justin Trudeau's view that the project is in the national interest and will create jobs, reassure investors, and increase Canada's global export potential.

As previously reported by OMX, the total economic opportunity represented by the pipeline expansion is $85.8 billion over the next twenty years.

 

What happens next?

Kinder Morgan will continue its original plan to twin the existing 1,150 kilometer pipeline between Strathcona County (near Edmonton), Alta., and Burnaby, B.C. while the sale is being finalized. The deal still has to be approved by Kinder Morgan shareholders, which is expected to happen at the end of August. 

The Trans Mountain pipeline was first constructed in 1953. The planned expansion would add 980 kilometers of new pipeline and almost triple capacity from 300,000 barrels a day to 890,000 barrels a day. 

 

Who's paying for the deal?

Export Development Canada will be financing the purchase, which includes the pipeline, pumping stations, and rights of way between Edmonton and Vancouver. The marine terminal in Burnaby, B.C., where oil is exported by tankers, is also included.

Canada will finish the construction on its own with the goal of selling the entire project later on. Morneau says the Federal government does not want to be a long-term owner of the project and is currently in negotiations with interested investors, including Indigenous communities, pension funds and the Alberta government.

A senior government official, speaking on background to CBC, said the Federal government hopes to find a new commercial buyer for the pipeline by August. The government won't publicly discuss construction costs for the expansion as it wants private companies to do their own assessments and bidding. If that fails, the government will put up the $4.5 billion to purchase the assets.

 

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What do Canadian leaders have to say?

Prime Minister Justin Trudeau: "Today, we've taken action to create and protect jobs in Alberta and B.C., and restart construction on the TMX pipeline expansion, a vital project in the national interest."

Conservative leader Andrew Scheer: "This is a very, very sad day for Canada's energy sector. The message that is being sent to the world is that in order to get a big project build in this country, the federal government has to nationalize a huge aspect of it."

Alberta Premier Rachel Notley: "The deal announced today puts people to work building this pipeline right away and creating good jobs. This deal and this pipeline will unlock investment in our oilsands because we are now on the path to getting full value for our energy resources."

B.C. Premier John Horgan: "Now we have both Ottawa and Alberta, rather than going to court to determine jurisdiction, they're making financial decisions that affect taxpayers, and they'll have to be accountable for that."

 

What do Canadians think? 

As previously reported in the OMX article, "What do Canadians really think about the Trans Mountain debate?":

More than half of Canadians are following the issue very closely

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The majority of Canadians can see the economic benefit

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The protests are having the opposite effect on the public

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But that doesn't mean Canadians agree with Kinder Morgan either...

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Canada considers indigenous concerns as important

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