Canadian Government to Buy Contested Oil Sands Pipeline

Prime Minister Justin Trudeau.					Charles Krupa  AP

Prime Minister Justin Trudeau. Charles Krupa AP

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.

Ottawa will take over the expansion and the existing pipeline and assets in a deal that will see Kinder Morgan immediately begin construction.

"It's not the intention of the government of Canada to be a long-term owner of the project", Morneau said, adding that pension funds and indigenous groups have already expressed an interest in buying stakes in the project.

Finance Minister Bill Morneau unveiled the government's long-awaited, big-budget strategy on Tuesday to save the plan to expand the oilsands pipeline. He described the $4.5 billion buy-out as a "fair price for Canadians", and said the commercial agreement is a "sound investment opportunity".

In addition to the initial costs of paying to nationalize a massive energy enterprise, Canada's CBC reports that the government could be obliged to spend billions more to finish the expansion.

The NDP government has opposed the pipeline expansion for environmental reasons and Horgan said he is still concerned about "catastrophic consequences" from a potential diluted bitumen spill.

The purchase will be financed by Export Development Canada and includes; the pipeline, pumping stations, the marine terminal in Burnaby, B.C. and rights of way along the pipeline between Edmonton and Vancouver.

"Nothing's changed with the obstacles or the problems with this project except that we're now not dealing with a Texas corporation". Morneau said cabinet approved the move, which now is before the company's shareholders.

"We said we would get the pipeline built and we are getting it built", she said, flanked by her celebratory caucus at a news conference overlooking the Alberta Legislature.

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Canada needs projects like the expansion created to triple Trans Mountain's capacity to move crude oil and refined products from the Alberta oilsands and Edmonton refining complex to the West Coast, said Chris Bloomer, CEO of the Canadian Energy Pipeline Association.

With files from the Canadian Press.

"We're still looking at what I would say are commercially sensitive touch points".

"For years and years and years, we've had pipelines built across Canada and the United States".

When the sale is finished, Canada will continue construction on its own, with plans to eventually sell it all in the future once market conditions improve.

In those heady days, it made some economic sense to build a pipeline devoted to developing Alberta's high-cost oil sands for export.

"John Horgan picked a fight with Alberta and provoked a constitutional crisis with Ottawa over this project and this is now the embarrassing result", Wilkinson said. Kinder Morgan had paused non-essential spending on the project over disputes between provincial governments in Alberta and B.C.

Canadian Association of Petroleum Producers president Tim McMillan said it was "great news" that Ottawa was prepared to "step up to clear the path to construction" and ensure Trans Mountain had full political and financial support. A lack of capacity in pipelines or in rail cars to ship oil produced in Alberta is also hurting Canada's energy sector.

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