Ottawa throws your money at its pipeline problem

3:17pm


Image Credit CFJC Today

"I think a lot of us who knocked on doors for the Trudeau government really believed them when they said they were going to bring evidence-based analysis and science and democratic process back to pipeline reviews".

Premier Dwight Ball is happy to see the federal government step in and buy the Kinder Morgan pipeline, but tossed cold water on any notion of the federal government taking Muskrat Falls off the provincial government's hands.

Kinder Morgan Canada, whose stock trades on the Toronto Stock Exchange under the KML ticker, saw its share price spike to $18 Tuesday morning after being halted ahead of the announcement of Canada's offer to buy the Trans Mountain pipeline and expansion project.

The finance minister said he plans to reprivatize the pipeline company as soon as possible.

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

If Canada indeed ends up buying the pipeline, it will be exclusively to ensure its capacity can be tripled, allowing Canada to find new export markets for its oil resources, Morneau said - and that ultimately, the long-term goal will be to find a private-sector buyer to take it over.

That means the Canadian taxpayer is financially implicated in the political war between Ottawa and the government of British Columbia, which is nothing anyone ever voted for.

So Ottawa has bought itself a pipeline that only succeeds economically if the Paris agreement fails. TD Securities downgraded shares of Kinder Morgan Canada from a "buy" rating to a "hold" rating and decreased their price target for the stock from C$24.00 to C$17.50 in a research report on Tuesday, April 10th.

The company said air monitoring is ongoing, and it has notified neighbours and other stakeholders.




That said, Ottawa made the only decision it could.

Kinder Morgan's May 31 deadline to decide if it has enough certainty to proceed is now just 72 hours away and while Trudeau says financial discussions continue, he also says there is nothing yet to say publicly. The government was out of options.

McMillan said if a pipeline that meets a high regulatory standard, has all the approvals, support from a majority of Canadians and the backing of the federal government can not get built, it sends a chilling signal that Canada is not open for business. It is purchasing hard assets that have an existing annual revenue stream, and it will own a company that has the necessary approvals to triple its capacity. It did what it had to do.

More than 200 people, including two members of Parliament, have been arrested already at Kinder Morgan's oil tanker and terminal site in Burnaby, British Columbia.

So the issue is not so much what the government has done, but what will happen next.

"It's fully subscribed by shippers, it goes to tidewater.it would be a good asset and you could sell that at a good price once you've got it done", he said.

Then there is the fact that governments are captive to different forces than private companies. It would have delivered oil to New Brunswick from Saskatchewan and Alberta to be refined at the Irving Oil operation in Saint John.

"Of course, there are still a number of court cases pending, but in total, we're looking at $15 -and could be as high as $20 in some cases - billion going into the old pipeline and the new pipeline".

Horgan said his province will continue to seek a legal remedy to stop the expansion. We just know how politics works.

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