Monday, 20 August 2018
Latest news
Main » Canada to Buy Kinder Morgan Pipeline for $3.5 Billion

Canada to Buy Kinder Morgan Pipeline for $3.5 Billion

30 May 2018
Canada to Buy Kinder Morgan Pipeline for $3.5 Billion

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

"As part of the agreement, the Government of Canada has agreed to fund the resumption of TMEP planning and construction work by guaranteeing TMEP's expenditures under a separate Federal Government recourse credit facility until the transaction closes", Kinder Morgan said. "The project has always been in the national interest". That claim is contested by the government of British Columbia and increasingly militant environmental and Indigenous protestors. "For Kinder this allows them to ameliorate some of the risk that they are carrying that the market doesn't like". "When an oil company owned by the Government of Canada is dragging protesting Indigenous youth off their own territory to make way for its reckless pipeline and tanker project, I hope Prime Minister Trudeau is ready to answer for the fact that all he had to do was let this thing fail".

The Canadian federal government's decision to buy the Trans Mountain Pipeline does not change the British Columbia government's approach to the project, Premier John Horgan said today.

"This move sets a awful precedent and signals to other prospective investors that large projects such as pipelines can not be built by private industry in Canada", said Aaron Wudrick, federal director of the Canadian Taxpayers Federation, a right-leaning group that advocates for lower taxes.

The government's plan has several stages.

The federal government and the Houston company were in talks for over a month about saving the project, which Kinder Morgan threatened to abandon as of Thursday unless federal officials remove political. In the event of a resale, the government would then "indemnify" the new owner or owners against certain costs or delays.

Morneau called the purchase an "exceptional situation" and said the government doesn't intend to be a long-term owner of the pipeline.

Buying the pipeline outright became increasingly likely after Trudeau first pledged only to backstop it.

"What I know, is that we have a climate action plan that we're working on... we've passed legislation giving specific targets, for greenhouse gas reductions by 2030, and we're carrying on", he said.

Political opposition is already building.

Ottawa paid $13 per Kinder Morgan share and the investor said he had a target price of $35 over time, if the pipeline is built. "Using taxpayers' money is just Justin Trudeau trying to buy his way out of his own failure", Scheer told reporters in Ottawa.

Alberta Premier Rachel Notley believes the reference case will have "less relevance", now that the feds have announced their move to take over buy the project. The company has a market value of $5.8 billion. "It got a very good price for their assets".

The federal government, he continued, "has responded and that's their business".

Kinder Canada Chief Executive Officer Steven Kean said on a conference call Tuesday that the company hasn't decided on what it will do with the proceeds, which will amount to about C$12 a share after taxes.

"CEPA is deeply concerned that the government needed to purchase the project for it to be built and to assert federal jurisdiction", Bloomer said.

But British Columbia's social democratic government recently joined environmental activists' fight against the pipeline, provoking a trade row with Alberta and leading Kinder Morgan to temporarily halt its construction until the dispute was resolved.

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.

"This is a major step forward for every single one of us", she said.

"How much of a win is this for Canadians?"

"In a single mandate, Justin Trudeau transformed from a climate champion into a Big Oil CEO", said Aurore Fauret, a campaigner with 350.org.