Canada buying Trans Mountain pipeline for $4.5B

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

Feelings remain raw as Alberta seeks progress on Trans Mountain project

If the project does eventually complete, the pipeline expansion will nearly double Canada's production capacity in the pacific oil markets from 300,000 barrels per day (bpd) to 590,000bpd.

But analysts believe Ottawa will need to provide the same financial indemnity it offered to Kinder Morgan to any potential buyer for the pipeline before it can sell it.

Prime Minister Justin Trudeau's government plans to spend $4.5 billion Canadian (US$3.4 billion) to purchase Kinder Morgan's Trans Mountain pipeline.

"It must be built and it will be built", Finance Minister Bill Morneau.

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.

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The Canadian federal government will likely have a hard time selling the Trans Mountain pipeline system it purchased for $4.5-billion on Tuesday until it can show the risks to the project have been reduced. "We have met the deadline", she tweeted.

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.

Canada loses $15 billion every year on the sale of oil because the USA remains its only export customer, resulting in a lower price, Trudeau argues.

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.

Indigenous leaders and environmentalists have pledged to do whatever necessary to thwart the pipeline including chaining themselves to construction equipment.

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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.

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.

"If you think about the dozens of pipelines that exist for crude oil, natural gas liquids, natural gas itself, petroleum products, all throughout the USA and Canada - and we track this stuff - I'm not aware of a single one that's owned by any government entity ... not on this scale".

Trudeau approved the expansion, arguing that it was "economically necessary" and enabled him to overcome opposition to a carbon tax plan that will help Canada cut its greenhouse emissions. British Columbia Premier John Horgan said last month that federal support put private investor concerns about those of Canadian taxpayers. Ottawa will buy the pipeline and all of Kinder Morgan's core assets for $4.5-billion, including pumping stations and rights of way along the route between Edmonton and Vancouver, as well as the marine terminal in Burnaby, British Columbia.

"Our reference case will continue", said Horgan. Alberta Premier Rachel Notley said the Canadian economy needs access to foreign markets and without projects like Trans Mountain, the economy is out as much as $30 million (USD) per day. "This project has more certainty than ever before. We won't stop until the job is done!"

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