Canada to buy Kinder Morgan pipeline project assets

Canada to buy Kinder Morgan pipeline project assets

It amounts to a nationalization of the critical pipeline project.

On Tuesday morning, Finance Minister Bill Morneau announced Ottawa would spend $4.5 billion to buy the pipeline expansion, and all of Kinder Morgan Canada's core assets.

According to the agreement, the two parties will work with the board to seek a third party buyer for the system and the expansion through July 22, 2018.

Green Party leader Elizabeth May has pleaded guilty to a criminal contempt of court charge for violating a court-imposed protest-free zone at a Kinder Morgan work sit in Burnaby in March.

The federal government has been in talks with the Texas-based energy infrastructure company for weeks over the future of its controversial Trans Mountain expansion. It makes more sense to let the government take on all the completion risk, he said.

Morneau says the federal government does not plan to be a long-term owner and is in negotiations with interested investors, including Indigenous communities, pension funds and the Alberta government.

The government has said it is willing to cover the costs of budget overruns on the pipeline caused by political interference from British Columbia, but the company has not yet indicated if that will be enough to convince it to put shovels in the ground.

Ottawa has the constitutional authority to build interprovincial projects like pipelines, but B.C. Premier John Horgan has gone to court to get a judge to weigh in on whether B.C.'s jurisdiction for the environment would allow him to regulate what flows through the pipeline.

"This move sets a bad 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.

Morneau said more investment will be needed to complete the construction of the pipeline expansion, and that in the long term the project "has commercial value" and should be in the private sector. Currently, he said yesterday, Canada is losing US$11.56 billion (C$15 billion) annually because of the pipeline constraint.

Financing will come from Export Development Canada.

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.