Economy 12 Years and $34 Billion Later, Canada's Trans Mountain Pipeline Expansion Is Set To Complete.

[Arkain2K]

Official Statements on the Nationalization of the Trans Mountain Pipeline:

 

[Arkain2K]

'Pick up those tools, folks, we have a pipeline to build,' Alberta premier says
Jubilant Rachel Notley says construction on Trans Mountain expansion will resume this summer
Michelle Bellefontaine · CBC News · May 29, 2018

Alberta Premier Rachel Notley applauded by her staff and caucus after the federal government's purchase of the Trans Mountain Pipeline.​

A jubilant Alberta Premier Rachel Notley thanked the federal government for making a deal to buy the Trans Mountain pipeline and get the expansion underway this summer.

"We said we would get the pipeline built and we are getting it built," Notley said at a news conference in Edmonton as members of her staff and caucus cheered.

"We will not stop until the job is done and in the meantime, to all Albertans: 'Pick up those tools, folks, we have a pipeline to build.' "

Earlier Tuesday, federal Finance Minister Bill Morneau announced Ottawa would buy the existing pipeline from Kinder Morgan for $4.5 billion and take over construction of the expansion which would triple the amount of bitumen shipped from Edmonton to Burnaby, B.C.

Alberta will provide up to $2 billion to an indemnity pool that will be paid only once oil begins to flow through the expanded pipeline. That amount will be converted into an equity stake in the project, Notley said.

"The people of Alberta will invest up to $2 billion, no more. Very possibly not one dollar of that," she said. "Whatever amount that we do invest we would get an equity stake in a project that we would know was commercially viable, and more than viable, but commercially profitable and likely to be successful."

The deal was reached two days before the deadline set by Kinder Morgan for making a decision on whether to proceed with the $7.4-billion expansion.

While Notley is confident construction will resume this summer, a case before the Federal Court of Appeal could turn that timetable upside down.

B.C. First Nations and environmental groups have challenged the National Energy Board and federal cabinet's approvals of the project. The ruling is expected any day.

B.C. Premier John Horgan has referred a question to his province's court of appeal, seeking an answer on whether Alberta has the constitutional authority to limit the flow of bitumen through the province.

Notley said the reference case, which she sees as a delaying tactic, will have less relevance now.

Horgan said he intends to carry on with the case, but Notley believes having the project in federal hands limits the effect of provincial legislation.

That raises questions about Bill 12, the turn-off-the-taps legislation, passed by the Alberta legislature earlier this month.

Notley said she isn't sure the bill will be used now that the crisis seems to have passed.

When asked whether the powers in that bill could still be used against B.C. once Trans Mountain is in federal hands, Notley suggested they could because it deals with permits which are within provincial jurisdiction.

No plans for long-term ownership

Jason Kenney, leader of the official Opposition United Conservative Party, said his caucus is prepared to support the $2 billion indemnification, as long as information doesn't come to light suggesting they shouldn't.

He criticized Prime MInister Justin Trudeau for putting taxpayers in this position by failing to assert federal jurisdiction in the face of B.C.'s delay tactics.

"We find ourselves in a situation where the prime minister is willing to buy out a private sector company in order to effectively nationalize a pipeline but this does not get us any closer to the certainty that we need," Kenney said.

Morneau said the government does not intend to be a long-term owner and, at the appropriate time, the government will work with investors to transfer the project and related assets to a new owner or owners.

"I have a set of mixed emotions about this," said Dennis McConaghy, former executive vice president at TransCanada PipeLines Ltd.

It's a "bittersweet moment" that the federal government was required to take out a private sector company to salvage a project, said McConaghy on CBC Radio's Edmonton AM Tuesday.

He described the purchase as an "enormous" intervention on the part of the federal government to get the project done.

The move is "fundamentally positive for Alberta's overall interests," he added.

The key short term issue is when construction will resume, and in the long term there are questions around the details of how the transaction will unfold, he said.

He doesn't expect any third parties to step in by purchasing the project before it's completed. It makes more sense to let the government take on all the completion risk, he said.

"I think most private owners are going to be happy to buy this thing once it's been built," McConaghy said.

Ottawa is expected to funnel billions of dollars into the controversial pipeline expansion, which has an overall estimated price tag of $7.4 billion.

http://www.cbc.ca/news/canada/edmon...gan-pipeline-federal-alberta-notley-1.4682213

 

[Arkain2K]

Bill Morneau's Kinder Morgan surprise comes with huge price tag, lots of political risk
Ottawa says buying the company's Trans Mountain pipeline is the only way to ensure the expansion gets built
By Chris Hall · CBC News · Posted: May 29, 2018

Finance Minister Bill Morneau says the decision to buy Kinder Morgan's Trans Mountain pipeline for $4.5 billion will guarantee work on the project goes ahead.​

Bill Morneau handed out his version of a Kinder Morgan surprise on Tuesday, announcing the federal government will buy out the company's Trans Mountain pipeline in its entirety in order to ensure the proposed expansion of the line goes ahead.

Nationalizing an oil pipeline — even temporarily — was never the first option for the finance minister. But it became apparent during Morneau's negotiations with Kinder Morgan that it was the only one that would allow the Liberals to deliver on their promise to get the work done.

"The Trans Mountain project is of vital interest to Canada and Canadians," Morneau said on Tuesday. "Getting (it) built will preserve thousands of good, well-paying jobs."

But getting it done, and keeping that promise, comes with a steep price tag.

Taxpayers will foot the $4.5 billion purchase price. That sum doesn't include what could be billions of dollars in construction costs, or the costs of cleaning up a spill — although Morneau said Alberta's government will share the cost of any unexpected or emergency cost overruns.

And there are no guarantees that the pipeline will return the investment when (and if) a buyer can be found sometime in the future — that selling the line will fetch an asking price that realizes the full value of the public money being invested.

Morneau said many private sector investors expressed interest in the project, though he failed to explain why none of them were prepared to take the same risk with shareholders' money he's taking with taxpayers' money, given the staunch public opposition and ongoing protests against the project at the pipeline's terminus in Burnaby, B.C.

He talked a good deal about how buying the project counters the political uncertainty created by British Columbia's NDP government. B.C. Premier John Horgan remains steadfast in his opposition to the project and has asked the province's highest court to rule on whether it has the constitutional right to impose environmental restrictions.

Big price tag, bigger political risk

Others will dissect the business case behind the federal government's decision, but the political calculations are just as important.

For Morneau and Prime Minister Justin Trudeau, the decision to spend billions of dollars carries considerable risk now and into the future.

There's the prospect of continued protests. There's the possibility, however remote, of a court ruling that sides with the Horgan government.

British Columbia will be a key battleground province in next year's election — a province where all three major political parties are competitive, the home base for Green Party Leader Elizabeth May.

May and New Democrat MPs oppose the project, insisting it is inconsistent with Canada's commitment to reducing climate-changing emissions and that it poses an unacceptable spill hazard to the B.C. coastline.

The Conservatives support the expansion, but insist the Liberals' handling of the file has been so inept that the only option left to the government — after rejecting the proposed Northern Gateway pipeline and seeing Trans-Canada abandon its planned Energy East line — was to build this expanded pipeline with taxpayers' money.

"He has chased away the investment on two other major pipelines … and now he's asking taxpayers to pay for the third," Conservative Leader Andrew Scheer said Tuesday.

The Liberals, befitting their position as the centrist party, come down the middle. Trudeau went into Tuesday's cabinet meeting repeating the government's mantra that "we're going to get that pipeline built."

He and his minister maintained that tripling Trans-Mountain's capacity from 300,000 to 890,00 barrels a day is in the national interest.

Putting a price on the national interest

The Liberals can — and likely will — argue that this decision also takes control of a vital piece of energy infrastructure away from a U.S.-based company.

"We've been saying for many, many months that the pipeline is good for the country not only for the many thousands of jobs it creates, but getting a better price for our crude internationally," Natural Resources Minister Jim Carr told the Commons on Monday.

This isn't the first time a federal government has nationalized a project, or spent billions of dollars of taxpayers' money on a private company. It's not the first time Ottawa put a price tag on the national interest.

Trudeau's father created Petro-Canada in the 1970s to counter the overwhelming U.S. dominance of the country's oil and gas sector.

Ottawa continues to hold an 8.5 per cent share in Hibernia — making it the fourth largest stakeholder behind oil giants Exxon, Chevron and Suncor. The project, which began production in 1997, is a commercial success.

But taxpayers came up roughly $3.5 billion short in the 2009 bailouts of Chrysler and General Motors, even though the Conservative government of Stephen Harper insisted the investment saved the auto sector and thousands of jobs in this country.

It's too early to say whether buying this pipeline will be a money maker or loser for taxpayers, whether the court case started by the B.C. government will drag on for months or even years, or whether the Liberals will get political credit for the decision when they go to the polls next year.

Add it all up, and Bill Morneau's bold decision to spend billions on a controversial pipeline may yield another, very different Kinder Morgan surprise next year.

http://www.cbc.ca/news/politics/pipeline-morneau-nationalize-1.4682199

 

[Arkain2K]

 

[Arkain2K]

Trans Mountain a necessary deal that no one should love
Chris Varcoe, Calgary Herald | May 29, 2018

Aerial view of Kinder Morgan's Trans Mountain marine terminal, in Burnaby, B.C.​

Welcome to Canada, a country boasting the world’s third-largest oil reserves, yet it can’t expand an existing pipeline without the federal government having to nationalize the entire project.

It’s a sad state of affairs, really, but no one should be surprised that Ottawa — with an assist from the Alberta government — had to step up Tuesday to buy the Trans Mountain pipeline to see its expansion move forward.

Yes, federal Finance Minister Bill Morneau insisted the deal makes economic sense and will restore investor confidence after Ottawa acquired Kinder Morgan’s pipeline project for the “fair” price of $4.5 billion.

Yes, it should ensure the energy infrastructure is completed, tripling the amount of oil from Alberta that will reach the Pacific coast, reducing the discount on western Canadian heavy crude.

Yes, it was the right decision in a tricky no-win situation.

But, honestly, what does it say to investors, industry and the rest of the world when Ottawa has to buy a viable commercial development to make sure it can be finished?

It says the entire situation is a sorry mess.

“It’s a disturbing outcome, in the sense that we shouldn’t have gotten here in the first place,” said Chris Bloomer, CEO of the Canadian Energy Pipeline Association.

“Every major pipeline infrastructure project has been a debacle . . . We’ve got to figure this out and do better.”

Tuesday’s energy deal comes after the Trans Mountain expansion went through a gruelling 29-month regulatory review.

The project was deemed to be in the national interest in 2016, approved with 157 conditions. It won federal cabinet approval and has withstood 16 separate legal reviews and challenges.

Yet, construction is a year behind schedule and the private-sector proponent just pulled the rip cord to escape.

What does it say about the chances of any future oil pipeline being proposed — much less built — after Kinder Morgan went through the process and spent more than $1.1 billion, yet walked away because it didn’t have certainty to get the project done?

“I don’t see how any private-sector pipeline company would be dumb enough to embark on a major pipeline project in Canada today,” said Hal Kvisle, former CEO of TransCanada Corp.

“The government would hope this shows Canadians that things can get done in this country, when it actually shows the private sector that even the best-laid plans are going to end up in the ditch.”

The political fracas over the pipeline came to a head last month when Houston-based Kinder Morgan suspended all discretionary spending on the Trans Mountain expansion.

The energy company said it needed firm assurances by May 31 it could get the development built through British Columbia, where the government of John Horgan has pledged to derail it.

The federal solution was to snap up the entire Trans Mountain pipeline system and related terminal assets for $4.5 billion, guaranteeing construction starts immediately.

Energy analysts said the price seems high; one report by RBC pegged the pipeline’s value around $2.3 billion, while noting another $1 billion has been spent on the expansion.

“It all comes down to what can you sell it for later,” said Richard Masson, former CEO of the Alberta Petroleum Marketing Commission.

Ottawa will seek a private sector buyer for the project, and is willing to extend federal indemnity to buffer the new owner from additional costs tied to politically motivated delays.

“We will look for prospective buyers, but . . . there will be construction throughout the summer and I think that may be the most important signal of all,” Natural Resources Minister Jim Carr said in an interview.

In Alberta, the Notley government will provide up to $2 billion in the form of a backstop for the project that would only come into play due to unforeseen circumstances.

No one would spell out precisely what that means, but it raises the possibility of Alberta picking up the tab on potential future cost overruns.

Premier Rachel Notley said Alberta could convert its investment into equity, and insisted no financial assistance would be paid out until the project is finished.

”Sometimes, on big national projects, the government has to step in and play a role,” the premier added.

After the failures of Energy East and Northern Gateway, the federal government and industry couldn’t afford to see Trans Mountain blocked.

But no one in Ottawa or Edmonton should mistake Tuesday’s acquisition as a major victory. A willing investor has just taken their money and gone home.

More legal challenges remain.

Across the energy sector Tuesday, there was general support for the government extending a lifeline to Trans Mountain.

Yet, reservations rang out from all corners.

“It’s a positive for the pipeline but what’s really frustrating to me, though, is this is actually discouraging corporate investment in energy transportation,” said Kevin Neveu, CEO of Precision Drilling, the country’s largest driller.

“As a corporation that is investing, do I need to wait for the government to get involved in every investment before I’m confident it’s going to go forward?”

The Canadian Association of Petroleum Producers said the decision shows a commitment by governments to support the industry. But the investment was done under “extraordinary circumstances and we should work very hard to never find ourselves in this position again,” said CAPP chief executive Tim McMillan.

The governments made a big gamble Tuesday, following a familiar path that saw Ottawa and Alberta invest in decades past in projects such as Syncrude and the bi-provincial upgrader.

Some have paid off, others have lost a bundle.

However, the latest deal sends a message that investing in Canada is a tough, unpredictable slog.

Ottawa better hope Canadians grow to like the deal: after all, the entire country just bought itself a new pipeline.

http://calgaryherald.com/business/e...tain-a-necessary-deal-that-no-one-should-love

 

[Arkain2K]

B.C. Wants Its Piece Of Trans Mountain Despite Opposition
By Irina Slav - May 31, 2018

British Columbia’s government still wants a US$780-million (C$1-billion) payment pledge to it by Kinder Morgan for the expansion of the Trans Mountain crude oil pipeline, despite its staunch opposition to the project, the Globe and Mail reports.

Kinder Morgan earlier this week agreed to sell the project to the federal Canadian government but a clause in the original contract with the previous B.C. government stipulated the province is due a payment of up to C$1 billion on a profit-sharing basis over a period of 20 years.

The interesting thing is that the payment was granted to a government that approved of the project in full, while the NDP cabinet in power now has been very active in trying to delay the project. In fact, it was these delays that eventually led Kinder Morgan to drop the project, leaving it to anyone willing to pick it up and try to make it work.

This turned out to be the federal government, which approved in back in 2016 and has been supporting it ever since without, however, finding a way to put an end to the opposition.

The Globe and Mail quoted B.C. Attorney General David Ebby as saying “The province is fully living up to its commitments under the agreement, and we expect that any future owner of the project would live up to theirs,” noting that the original agreement between the province and Kinder Morgan included no condition that the provincial government cannot change its mind about the Trans Mountain expansion.

https://oilprice.com/Latest-Energy-...ece-Of-Trans-Mountain-Despite-Opposition.html

 

[Deleted member 263856]

B.C. Wants Its Piece Of Trans Mountain Despite Opposition
By Irina Slav - May 31, 2018

British Columbia’s government still wants a US$780-million (C$1-billion) payment pledge to it by Kinder Morgan for the expansion of the Trans Mountain crude oil pipeline, despite its staunch opposition to the project, the Globe and Mail reports.

Kinder Morgan earlier this week agreed to sell the project to the federal Canadian government but a clause in the original contract with the previous B.C. government stipulated the province is due a payment of up to C$1 billion on a profit-sharing basis over a period of 20 years.

The interesting thing is that the payment was granted to a government that approved of the project in full, while the NDP cabinet in power now has been very active in trying to delay the project. In fact, it was these delays that eventually led Kinder Morgan to drop the project, leaving it to anyone willing to pick it up and try to make it work.

This turned out to be the federal government, which approved in back in 2016 and has been supporting it ever since without, however, finding a way to put an end to the opposition.

The Globe and Mail quoted B.C. Attorney General David Ebby as saying “The province is fully living up to its commitments under the agreement, and we expect that any future owner of the project would live up to theirs,” noting that the original agreement between the province and Kinder Morgan included no condition that the provincial government cannot change its mind about the Trans Mountain expansion.

https://oilprice.com/Latest-Energy-...ece-Of-Trans-Mountain-Despite-Opposition.html

Lol, pieces of shit

 

[salamander]

Might be a good idea for me to stop following the news for the next fewe years. This is exceptionally disheartening.

 

[Arkain2K]

Lol, pieces of shit

I wonder what local B.C resident @AnGrYcRoW think about his province's outrageous claim to be "fully living up to its commitment" to the Trans Mountain expansion project to get that $780 Million revenue-sharing money from Ottawa if they fail to kill the project.

 

[no fat chicks]

now that its nationalized may as well refine it too

 

[Deleted member 263856]

I wonder what local B.C resident @AnGrYcRoW think about his province's outrageous claim to be "fully living up to its commitment" to the Trans Mountain expansion project to get that $780 Million revenue-sharing money from Ottawa if they fail to kill the project.

I really hope that the feds honor KMs commitment to the First Nations that are for and benefitting from this pipeline. I don't want them to get shafted just because the owners changed. As for the NDP/Green government, I'd give them fuck all unless the obstructionism stops.

 

[Deleted member 263856]

now that its nationalized may as well refine it too

I read somewhere (EJ maybe) that AB can get more bang for it's buck if we just sell the crude out to foreign refineries without having to deal with the cost of and environmental impact of refining. I could easily be wrong though. Feel free to correct me if you have the time.

 

[Arkain2K]

I really hope that the feds honor KMs commitment to the First Nations that are for and benefitting from this pipeline. I don't want them to get shafted just because the owners changed. As for the NDP/Green government, I'd give them fuck all unless the obstructionism stops.

Oh, I'm completely certain that the revenue-sharing deal with the native tribes along the route will stay in place, and they have been very vocal in support of the project, despite the token figureheads trucked in by Green Peace who claim to be representing ALL the First Nations.

B.C's is an entirely different story. The current government is demanding the death of the pipeline, while insisting that they should be paid by whoever owns the project, because apparently they are doing everything to ensure its success, as the previous government agreed to.

I sincerely hope there's a clause somewhere in the contract that say they'll get squat if they sabotage the agreement.

 

[Rockapotomuss]

This could result in some First Nations seceding from Canada .

 

[Arkain2K]

There is no buyer waiting in the wings, just another baby step towards nationalization.

The mood in the field today was grim as shit.

Here's an interesting news: a coalition of Indigenous tribes from Alberta are requesting to buy an equity stake. I'm not sure how many percent they want to own, but just having tribes among the owners should put that often-repeated lie that "all First Nations are against oil pipelines" to rest.

Alberta Indigenous coalition want to buy equity share in Trans Mountain pipeline
David Thurton · CBC News · Posted: May 31, 2018

Indigenous groups in the Fort McMurray region of Alberta have put governments on notice they want to buy an equity share in the controversial Trans Mountain pipeline.

While Premier Rachel Notley was in Fort McMurray doing a victory lap after the federal government agreed to buy the Trans Mountain pipeline, Indigenous leaders released a statement that they intended to buy an equity stake in the line.

"You know, in order for us to be successful, we need to move the oil," Athabasca Chipewyan First Nation Chief Allan Adam said after the premier spoke.

The Indigenous groups hand-delivered a letter to Notley during their scheduled meeting with the premier.

Notley said interest from a variety of groups is to be expected in the pipeline and she doesn't doubt, in the spirit of reconciliation, the federal government will consider business proposals from Indigenous groups.

"I'm encouraged to see what we have always known to be the case, that many First Nations and Indigenous leaders across this country see our resources as being a source of income," Notley said.

The Indigenous coalition also sent a letter to Finance Minister Bill Morneau after meeting with federal ministers Amarjeet Sohi and Ralph Goodale on Wednesday.

Earlier this week, the federal government announced it will spend $4.5 billion to buy the Trans Mountain pipeline and related infrastructure, and it will also take on construction of the pipeline to the west coast.

The government has also said it is interested in finding a new buyer to operate the pipeline.

Indigenous groups in Alberta and B.C. and pension funds have expressed interest in purchasing the pipeline from the government.

The Alberta Indigenous groups represent five First Nations that form part of the Athabasca Tribal Council, and five that form part of the Athabasca River Métis.

All but the Fort McKay First Nation signed the letter, said Ron Quintal, president of the Athabasca River Métis.

The coalition said it wants to buy an equity share in the pipeline to help secure the economic future of their communities.

Many of the region's First Nations and Métis groups already own companies involved in the oilsands.

The Fort Mckay First Nation and the Mikisew Cree First Nation purchased a 49 per cent share in a Suncor tank farm in November.

The groups said they want a seat at the table to ensure the pipeline is built with the highest respect for the environment.

"There are no bad pipelines from our perspective," Quintal said. "There are bad operators. So from our perspective, it is not just about buying in to become fiscally sustainable. It's so we can be environmentally sustainable."

The leaders said they'll only buy into the pipeline after consultation with their members and their elders.

http://www.cbc.ca/news/canada/edmon...rt-mcmurray-trans-mountain-pipeline-1.4685635

 

[Arkain2K]

Gosh damn, that was brutal.

 

[Arkain2K]

The skewering continues, this time with Trudeau at the receiving end.



I'm no fan of the guy, but the audacity of the fucking BC NDP to actually criticize the Canadian government after they single-handedly bringing forth this disaster is outstanding. Skip to 9:45 for the shit-talking from Nathan Cullen, BC, while his colleagues put on their best internet-ready reactions.

The cheap-shot about Trudeau smoking weed before it's legal in August is hilarious though

 

[Arkain2K]

11 answers to questions about Ottawa's Trans Mountain ownership
Nelson Bennett | June 6, 2018

Kinder Morgan's Trans Mountain marine terminal, in Burnaby, B.C.​

Last week, the government of Justin Trudeau took a surprising and dramatic step to salvage the $7.4 billion Trans Mountain pipeline twinning project. The project is critical to oil producers in Alberta, since it would expand the current pipeline’s capacity of 300,000 barrels per day to 890,000.

But after facing lengthy delays, legal challenges, public protests, and opposition from B.C.'s NDP government and the cities of Burnaby and Vancouver, Kinder Morgan Canada threatened to cancel the project.

The government announced it will buy out Kinder Morgan’s Trans Mountain pipeline assets and assume the financial and political responsibility for getting the twinning project built.

Q: What is Canada buying and how much will it cost?

A: Ottawa is buying Kinder Morgan Canada’s existing Trans Mountain pipeline and associated assets for $4.5 billion, which includes the $1.1 billion Kinder Morgan has already spent on the expansion project.

Assets include the Westridge Marine Terminal in Burnaby, Puget Sound pipeline, a jet fuel pipeline to Vancouver International Airport and terminal and tank farms in Kamloops and Sumas. It does not include assets unrelated to the pipeline, like the Vancouver Wharves bulk terminal. The sale is worth $13 per share to Kinder Morgan shareholders.

Q: What will Ottawa own now, and why?

A: The existing Trans Mountain pipeline is a critical piece of the $7.4-billion twinning project. One cannot be built without the other. The new line generally shares the same pipeline corridor as the existing one, and requires expansions to key pieces of Kinder Morgan infrastructure, including Westridge Marine Terminal.

Kinder Morgan felt that because of opposition from the B.C. government, there was too much political uncertainty to move forward on the expansion project, and Ottawa agreed, saying it is better positioned to deal with B.C.

“What we have here is risks and delays caused by political uncertainty,” federal Finance Minister Bill Morneau said. “A private actor can’t deal with that uncertainty between provinces. We’re saying, in order to deal with that uncertainty … we’re exerting our federal jurisdiction by purchasing the project. Over the next stage we are looking to move this project back into the private sector.”

Iain Black, CEO of the Greater Vancouver Board of Trade, said, “The government made the best decision from a list of really bad options.”

Q: How does this deal work?

A: Kinder Morgan has agreed to immediately resume construction of the $7.4-billion expansion project, with Ottawa agreeing to cover the costs. The sale of the Trans Mountain assets is expected to close in August and is subject to a vote by Kinder Morgan shareholders.

In addition to Kinder Morgan’s assets, Ottawa will acquire the management team assembled to build Line 2. Kinder Morgan and Ottawa will try to find a buyer for the existing pipeline and twinning project.

Kinder Morgan’s team will essentially end up building the project on behalf of the new owner – the Canadian government – unless some other company steps in right away and buys the project outright.

Q: What if Canada can’t find a buyer? Is this a bad investment?

A: If Ottawa can’t find a buyer, Canadian taxpayers will be stuck with a highly profitable pipeline.

The existing Trans Mountain pipeline made $300 million in revenue last year, with a 9.5% return on equity, according to University of Calgary economics Prof. Trevor Tombe.

But Morneau has made it clear his government has no desire to be a long-term pipeline owner.

Tombe doesn’t think Canada will find a buyer until after the twinning project is complete, however.

“The tricky part is getting it completed,” he said. “But once it’s complete, it’s a very valuable asset.”

As Tombe points out, pipelines receive stable revenues from petroleum producers, regardless of where oil prices go, so they are reliable money-makers.

“Once it’s built, they’ll easily be able to offload the asset to a private buyer,” he said.

Solomon Associates consultant Jihad Traya agrees: “Bluntly, this is a great asset. It’s a very profitable, very strategic asset.”

Q: Are revenue-sharing agreements with B.C. and First Nations still on the table?

A: Yes. Morneau said existing benefits agreements negotiated by Kinder Morgan with First Nations will remain in place. The Ministry of Finance has also confirmed that the $1 billion revenue-sharing agreement that Kinder Morgan struck with the former provincial government remains in place.

The federal government might take some heat for that because the revenue-sharing agreement was part of a bargain with the B.C. government, which has since reneged on its support for the Trans Mountain project.

The revenue sharing – which would provide B.C. with $25 million to $50 million per year once the twinning is completed – was one of five conditions the previous BC Liberal government set. All five had to be met before the provincial government agreed to support the project.

But the new NDP government essentially withdrew the provincial government’s support. The B.C. government’s attempts to halt the project are what led to Ottawa committing $4.5 billion to acquire Trans Mountain assets and potentially at least $7.4 billion more to complete the twinning project.

Q: Will tolling rates change for the 13 shippers?

A: That is a question that the Finance Ministry was unable to answer, and which Alberta oil producers like Cenovus Energy Inc. will be asking as the deal is finalized.

Thirteen oil producers in Alberta made long-term commitments for Line 2. Their main concern now is that if the project goes significantly over budget, they could be asked to pay higher toll rates.

“As a committed shipper on the project, we will be looking for more details to ensure that our commercial terms will remain reasonable,” said Cenovus CEO Alex Pourbaix, a former longtime CEO for TransCanada Corp.

“It is our hope that this additional financial certainty, combined with the federal government’s ability to assert jurisdiction over national infrastructure projects, will allow the project to proceed without further undue delays or significant cost overruns.”

Q: How does this new arrangement address opposition from B.C. and anti-pipeline protesters?

A: As a private company, Kinder Morgan does not have the authority to overrule a hostile provincial government – but Ottawa does. B.C. Premier John Horgan has even conceded it will be easier for him to deal with Ottawa, rather than with Kinder Morgan, when addressing provincial concerns over the pipeline.

“I do believe that the federal government now is totally accountable, not just for regulation and approval of a pipeline, but they now are responsible from wellhead to tidewater and beyond, and I think that allows me to have more candid discussions with the owners of the pipeline than I would have been able to when they were shareholders in a Texas-based oil company,” Horgan said. “The federal government now is completely accountable, and I think that is probably at the end of the day a good thing.”

As for protesters, some of whom have shown up at Kinder Morgan shareholder meetings, their adversary is no longer a big Texas pipeline company, but their own federal government. Last week, they were already showing up to protest Morneau’s appearance before the Calgary Chamber of Commerce.

Q: Who might ultimately end up owning and operating the expanded pipeline?

A: It could be some other midstream company, or a joint venture that might include pension funds, First Nations, and oil producers that would use the new pipeline. Kinder Morgan itself could even end up being one of the shareholders.

“I would not be surprised if it’s the same group, reconstituted with some sort of ownership structure change,” Traya said. “Theoretically you can still have Kinder Morgan having portions of it.”

The Cheam First Nation is one Indigenous group that is interested in taking a stake. Chief Ernie Crey said one way of gaining equity is through the federal government’s reconciliation efforts.

“Definitely I see an open door to the possibility of taking out an equity position in the pipeline as part of what I would describe as economic reconciliation with Canada,” Crey said. “But for sure we would have to go to large lenders and borrow funds to take out a stake in the pipeline.”

Q: What happens if the $7.4-billion twinning project goes over budget?

A: Ottawa and Alberta have agreed to indemnify the twinning project, should it encounter unforeseen delays or cost escalations as a result of “political uncertainty.” Alberta has committed $2 billion to cover such unforeseen overruns. Any money Alberta spent would be converted to equity in the pipeline.

Moody’s Investors Service says the deal is “credit negative” for Alberta.

Some observers have predicted the twinning project’s cost could ultimately be as high as $12 billion.

But if the project goes over budget, it will still be a valuable, revenue-generating asset for decades to come, Tombe said.

“Even if it gets as high as $12 billion, it’s still economic in terms of the ability to generate revenue once it’s completed.”

Q: What cases are still before the courts that could jeopardize the project?

A: None, according to Robin Junger, a lawyer specializing in Aboriginal and environmental law with McMillan LLP.

More than a dozen court challenges against the Trans Mountain pipeline project have failed. Cases still in play include the B.C. government’s referral to the BC Court of Appeal to clarify whether it has the authority to restrict the flow of diluted bitumen from Alberta through B.C.

The best the province can hope for is acknowledgment that it has the legal authority to impose some conditions on the pipeline under provincial environmental laws, Junger said.

“There is no scenario in which the BC Court of Appeal says you can stop this pipeline,” Junger said. “The only question is this: ‘If you have the ability to regulate bitumen at all … how far can you go without stopping it?’”

Another important case is still before the Federal Court of Appeal, with a ruling expected any day. In that case, five First Nations argued Canada failed to properly consult Aboriginal stakeholders.

It is essentially the same argument made against the Northern Gateway project. In that case, the same court ruled Canada had failed to properly consult, essentially ordering the government to redo its consultations. That never happened, however, because the new Trudeau government put an end to the Northern Gateway project.

The worst that could happen is additional delays to the project – delays the federal government is now prepared to indemnify.

“If you lose a duty-to-consult case, it’s not the end of the world for a project,” Junger said. “You go and consult some more and then you redo the decision.”

Q: What message does this send to international investors?

A: Nationalizing Trans Mountain addresses one particular project, business leaders say, but more generally it sends a very negative signal. The Trudeau government has essentially conceded that, even though it claims to have jurisdictional authority, it cannot exert that authority without owning the project.

“We view the announcement as negative for entities considering large, resource-focused capital investments in Canada such as LNG, pipelines or oilsands projects, given the inability for the rule of law and regulatory approvals to allow projects to move forward,” GMP Securities said in a note to clients.

“We are left questioning why any company would pursue large capital investment in Canada.”

Jerry Bailey, a former Exxon Mobil Corp. executive and CEO of Petroteq Energy, which is focused on oilsands production in Utah, said the Canadian government’s decision to nationalize the pipeline was the right one. He expects it will renew investment confidence in Alberta’s oilsands.

“I think it will be a big boost,” he said. “There’s no point in investing in anything if you think you’re going to be stuck with a product with no way to get it to market.”

But Canadian business leaders say Canada needs to address the deeper problem of a dysfunctional regulatory and political system that has resulted in cancellation of multibillion-dollar projects, divestment from the oilsands by major oil companies and a general flight of capital – all of which are signs that Canada has become unsafe for investors.

“All of this talk about investment slowing down – it’s for real,” said Brad Hayes, president of Petrel Robertson Consulting.

“Canada has always sold itself as being a low political risk and great regulatory regime. But it is, for real, developing the reputation of being a higher political risk, not because there’s any dictators that are going to take over or whatever, but just because you propose something reasonable and somebody says they don’t like it and it gets ground to a halt.”

The Greater Vancouver Board of Trade’s Iain Black called the project “a poster child for why we have to have a very thorough review of what’s going on and fix the problems that are inherent.”

Greg D’Avignon, president of the Business Council of British Columbia, agreed, saying controversy over the pipeline “has shone a light on what companies have known for years: Canada is too costly, too complex and takes too long to come to a decision and get things done.

“The system has broken down to the point where taxpayer dollars are required to complete major infrastructure projects that support our collective prosperity when there have been willing private-sector, taxpaying investors.”

http://www.alaskahighwaynews.ca/bus...-ottawa-s-trans-mountain-ownership-1.23327148

 

[Arkain2K]

The skewering continues, this time with Trudeau at the receiving end.



I'm no fan of the guy, but the audacity of the fucking BC NDP to actually criticize the Canadian government after they single-handedly bringing forth this disaster is outstanding. Skip to 9:45 for the shit-talking from Nathan Cullen, BC, while his colleagues put on their best internet-ready reactions.

The cheap-shot about Trudeau smoking weed before it's legal in August is hilarious though

Follow along as opposition parties question the Trudeau government in the House of Commons. Today the government faced questions related to the carbon tax, Ontario election and the Trans Mountain pipeline plan.



These Question Periods are certainly interesting to watch, but am I the only one who think they should ban the reading prepared answers off a piece of paper that has nothing to do with the questions?

 

[3825 968]

Lol they arent even allowed to answer questions for themselves. I wonder who writes the answers to these questions.