Canada To Buy Kinder Morgan's Trans Mountain Expansion Project

Hibernia Oil

To do so, Canada will pay the pipeline's current owner, Kinder Morgan, $4.5 billion in Canadian dollars - about $3.5 billion in USA currency.

At this point, both the federal and Alberta government will offer financial security, or indemnification against any ongoing political risk, to the new investors.

"It must be built and it will be built", Finance Minister Bill Morneau.

Kinder Morgan last month gave Ottawa an ultimatum: Chairman Steve Kean said the company would suspend all work on the expansion project entirely if the legal issues surrounding it can not be resolved by May 31, adding that it would not continue risking shareholder funds on the project unless the clouds over it clear.

The Canadian Energy Pipeline Association (CEPA) is pleased that the Trans Mountain Expansion Project (TMEP) will be constructed.

The price tag for the Trans Mountain expansion has been pegged at $7.4 billion but Carr would not say whether that figure was accurate or if there has been cost overruns. Ottawa will buy the pipeline and all of Kinder Morgan's core assets for $4.5-billion, including pumping stations and rights of way along the route between Edmonton and Vancouver, as well as the marine terminal in Burnaby, British Columbia.

Under the proposed federal plan, the Trans Mountain pipeline will be placed under the stewardship of a new Crown corporation and Ottawa will divest itself of the project at a later date.

Moe has repeatedly said the federal government should do more to ensure the project gets built and charged they have "no clear plan" to do so.




Saskatchewan's premier says he is "cautiously optimistic" and hopeful Ottawa's plan to purchase the Trans Mountain pipeline for $4.5 billion works.

With files from the Canadian Press. "We've seen an announcement here this morning, we need shovels in the ground, we need construction to start on this piece of infrastructure", Moe 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.

In a tweet, Premier Rachel Notley called the announcement "a major step forward for all Canadians".

Until now, Trudeau's government has used a soft tone to try to convince British Columbia to abandon its opposition to the pipeline, hoping not to alienate voters in the province before next year's general election. Canada's long-term plan is to finance the costs of construction through the paid contracts with oil producers to ship their oil through the pipeline, and recoup its investment through an eventual sale.

Alberta will also invest up to $2 billion in indemnity, to be converted to equity if necessary. He said that shareholders would receive a "fair price" for the assets.

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.

Prime Minister Justin Trudeau has long insisted the project is in Canada's national interest and is a pivotal part of the country's economic future. "I think that's been reinforced by the fact that Kinder Morgan was able to build up through different open seasons to a high level of commitment (from shippers)", he said.

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