Canadian government buys Trans Mountain project for $4.5 billion

Quebecers gathered to protest the Kinder Morgan Trans Mountain pipeline in Montreal on Sunday

Quebecers gathered to protest the Kinder Morgan Trans Mountain pipeline in Montreal on Sunday

In an extraordinary development early Tuesday, the federal government announced it would buy the Trans Mountain pipeline system and its planned expansion project for C$4.5 billion ($3.5 billion) to ensure it gets built.

Finance Minister Bill Morneau believes Canada's authority to build the pipeline will be able to overcome any resistance, be it from protesters or the B.C. government.

The move to buy the pipeline from an affiliate of USA -based pipeline company Kinder Morgan follows the company's threat to pull the plug on the expansion because of delays caused by opponents of the project. Citing investor uncertainty, it also said it would give up on the expansion plan if British Columbia did not stop its attempts to block it by this Thursday.

"B.C.is doing all the right things" said May.

Nationalizing a major infrastructure project from Canada's private sector is certainly not how the process is supposed to work, but little about the Trans Mountain expansion has gone the way it ought to according to either rule of law or convention.

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

"Now we're committed to building the expansion, but they have not announced at all how they are going to finance the expansion", said May.

"If they didn't spend it on that, they'd spend it on something else", she said.

The deal was approved by cabinet on Tuesday morning and is now subject to approval by Kinder Morgan stockholders. It certainly won't cost any less than the almost $7.5 billion Kinder Morgan had allocated for it.

The purchase will see Canada buy the existing pipeline, the Westridge marine terminal in Burnaby, B.C., as well as pumping stations and rights of way along the routes. Kinder Morgan previous year said it was about $7.4 billion, plus about $1 billion already spent - an estimate that's now considered low.

Under the agreement between the federal government and Kinder Morgan, the company would resume construction on the project, which was put on hold in April.

"It does not change the course that the Government of British Columbia has been on", Horgan said.

"It seems completely insane", May said. They have also asked the court to reopen its evidentiary record, more than six months after hearings concluded, to consider new evidence uncovered by a National Observer investigation that revealed public servants were instructed to find a way to approve the project before the government had concluded consultations with First Nations.

The Canadian Energy Pipeline Association "is deeply concerned that the government needed to purchase the project for it to be built and to assert federal jurisdiction", the group's president and CEO, Chris Bloomer, said in a statement.

Alberta's tarry bitumen, which will always sell at a discount due to its poor quality, can't move through a pipeline without being diluted with costly imported light oils or fracked natural gas liquids from B.C. or the United States.

"Canada's purchase of a tar sands pipeline and expansion project eviscerates any claim it has to climate leadership at a key moment - doubling down on the world's dirtiest oil, rather than closing the gap on the country's Paris climate commitments", said Anthony Swift, the Canada program director for the US -based Natural Resources Defense Council, in a statement.

"It's really quite a turnup for the books for the Canadian government to buy itself a pipeline", he said.

"Canada stands to sacrifice its worldwide reputation, irreplaceable iconic species like the Southern resident Killer Whales, and its commitments to meet its Paris Climate targets and to reconcile with Indigenous people - all while putting enormous risk on Canadian taxpayers".

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