Published: Tue, May 29, 2018
Science | By

Canada to Buy Kinder Morgan Pipeline for $3.5 Billion

Canada to Buy Kinder Morgan Pipeline for $3.5 Billion

Morneau presented the options during an early-morning cabinet meeting Tuesday before ministers made a decision on how to proceed. "At a critical moment in history, the government is indeed doing "whatever it takes" to undermine our transition to a safe, clean, renewable energy future".

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

Under the plan, revealed Tuesday by federal Finance Minister Bill Morneau, Kinder Morgan will go ahead with its original plan to twin the pipeline this summer while the sale is finalized.

The two western provinces have been sparring over the pipeline, a situation that Mr Morneau said can not be allowed to "fester". The plan includes the existing pipeline that's been in operation since 1953.

"We think obviously this is very constructive for Kinder and for Canada and clearly for Canadian producers in particular because it creates a lot of regulatory certainty over the time that the Trans Mountain expansion can get done", Katie Bays, an analyst with Height Securities LLC in Washington said in a telephone interview.

Prime Minister Justin Trudeau has maintained that Kinder Morgan's Trans Mountain pipeline expansion is in the national economic interest.

The Trans Mountain expansion would nearly triple capacity to 890,000 barrels of oil on a line running from Alberta to a terminal near Vancouver.

Kinder Morgan, the company behind the pipeline, suspended non-essential spending on the project in April.

But many indigenous people see the 620 miles (1,000 kilometers) of new pipeline as a threat to their lands, echoing concerns raised by Native Americans about the Keystone XL project in the U.S. Many in Canada say it also raises broader environmental concerns by enabling increased development of the carbon-heavy oil sands.

Clayton Thomas-Muller, a campaigner with, argued that Trudeau's move demonstrates that he "still hasn't learned two simple lessons: you can't be a climate leader and build massive fossil fuel projects and you can't ignore Indigenous rights and preach reconciliation". The 980-kilometer (600-mile) expansion is seen by the oil industry as a crucial link to Asian markets, allowing producers to diversify away from the US, which takes the vast majority of Canadian oil exports.

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