Canadian government to buy pipeline project from Kinder Morgan for $4.5bn

Canadian government to buy pipeline project from Kinder Morgan for $4.5bn

The Government of Canada has reached an agreement with Kinder Morgan to buy the Trans Mountain Expansion Project and related pipeline and terminal assets for US$3.5 billion (C$4.5 billion), as the federal government stepped in to save the project after British Columbia's fierce opposition to the project was threatening to derail it.

The deal was approved by cabinet on Tuesday morning and is now subject to approval by Kinder Morgan stockholders.

"It must be built and it will be built", Finance Minister Bill Morneau. "They are getting a very good value", said Paul Bloom at Bloom Investment Counsel Inc, which owns about 300,000 shares in Kinder Morgan Canada.

"We said we would meet the deadline".

"We are pleased to have worked with the federal government to ensure construction resumes, certainty is increased and Albertans and all Canadians enjoy the many benefits of having the project go forward", Notley said in a statement.

The federal government's acquisition of the project "has not changed the course of the government of British Columbia" and the province has "no intention" of withdrawing its legal reference case, Premier John Horgan told reporters Tuesday in Victoria.

The project will duplicate an existing 1,150km pipeline, allowing it to ship up to 890,000 barrels of oil a day from landlocked Alberta to the Pacific coast of neighbouring British Columbia, in western Canada, for export overseas.

"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.

Alabama, Mississippi activate National Guard ahead of Subtropical Storm Alberto
The storm is the first storm of this year's hurricane season , coming a few day before the season officially starts on June 1. On the current path it will make landfall as a subtropical torm. somewhere across the western Florida Panhandle.

Kinder Morgan Canada and the Canadian government have agreed to work to seek a third party buyer for the Trans Mountain Pipeline system and the expansion project (TMEP) through July 22, 2018, Kinder Morgan Canada said.

The ultimate cost of the federal government's new pipeline scheme remains unclear.

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

The ensuing uncertainty, paired with vociferous opposition from environmental groups and some Indigenous communities in B.C., prompted Kinder Morgan to halt investment until the federal government could inject some certainty into the project.

The province said it had pledged up to $2 billion for the project if needed, but said it may not need to use any of those funds. But over the past 30 years, the Canadian government has launched a major privatization effort, selling Air Canada, Canadian National Railway and Petro-Canada. "It polarized us. That is not who we are", Carr told the news conference.

Prime Minister Justin Trudeau emphasized those differences in his first public comment since his government's announcement.

Canada's oil sector has been stung in the past year as foreign energy companies retreated amid concerns about the environmental toll, high production costs and a risky regulatory regime.

As for serving the broader national interest, as the Finance Minister claims, Canada's strategic interests do not rest with feeding more cheap feedstock to U.S. West Coast refineries and then buying back refined products at a huge price spread.

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