Canada to buy Kinder's Trans Mountain pipeline for $3.5 billion

​Senate passes bill calling for Ottawa to back Trans Mountain | Regulatory

The West Coast Express passenger train passes in front of Kinder Morgan's Trans Mountain marine terminal, in Burnaby, B.C., on Tuesday, May 29, 2018.

Canada's federal government said Tuesday it is buying a controversial pipeline from the Alberta oil sands to the Pacific Coast to ensure it gets built.

The Canadian government said on Tuesday it will buy Kinder Morgan Canada Ltd's Trans Mountain pipeline project for C$4.5 billion but does not intend to be the long-term owner of the project, which has faced fierce environmental opposition.

Morneau echoed Prime Minister Justin Trudeau, who told the Canadian Parliament shortly before the deal was unveiled, "It is in the national interest to go ahead with it and that's why the pipeline will be built".

The pipeline expansion would triple the capacity of an existing line to ship oil extracted from the oil sands in Alberta across the snow-capped peaks of the Canadian Rockies.

Financing for this purchase will come from Export Development Canada.

Facing stiff environmental opposition from British Columbia's provincial government and activists, Houston-based Kinder Morgan earlier halted essential spending on the project and said it would cancel it altogether if the national and provincial governments could not guarantee it.

"Make no mistake: this is an investment in Canada's future". Canada has the world's third largest oil reserves but 99 percent of its exports now go to refiners in the USA, where limits on pipeline and refinery capacity mean Canadian oil sells at a discount.

But he added in a statement that the association is "deeply concerned" that the government felt it had to purchase the project "to assert federal jurisdiction" and allow it to be built. Trudeau pledges regularly that the pipeline will be built.

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Under the proposed federal plan, the Trans Mountain pipeline will be placed under the stewardship of a new Crown corporation and Ottawa will divest itself of the project at a later date.

Now 99 percent of Canada's oil is sold to the United States at a discount, and access to the Pacific coast is seen as key to diversifying the world's sixth largest oil producer's energy exports.

In a research note, he said that Calgary-based pipeline giants Enbridge Inc. and TransCanada Corp. would be likely buyers if they "were able to secure sufficient security from the government". British Columbia Premier John Horgan said last month that federal support put private investor concerns about those of Canadian taxpayers.

Horgan said he's anxious about the "catastrophic consequences" should there be a spill, regardless of the owner, and will continue to fight it in court.

Notley says there is more certainly around the project than there has ever been and she doesn't plan to use her province's legislation to regulate the flow of oil exports for now.

Alberta Premier Rachel Notley says she sees no immediate need to turn off the oil taps to British Columbia now that the federal government is taking over the Trans Mountain pipeline expansion.

Morneau's announcement immediately prompted more protest vows to resist the project in the name of preventing offshore oil spills and stopping thermal tar sands production blamed for increasing Canadian carbon emissions.

"We believe this is the best way to protect thousands of well-paying jobs and the safest and most effective way to get our resources to world markets", Morneau told a news conference in Ottawa after the meeting.

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