Coverage: Canada is buying Kinder Morgan’s pipeline

The Canadian government on Tuesday said it would buy Kinder Morgan’s oil pipeline to the country’s west coast, ensuring that its widely protested expansion will go forward.

Ian Austen of The New York Times had the news:

The Trans Mountain pipeline, which carries oil from Alberta to a port in a suburb of Vancouver, British Columbia, has become a flash point in a wider debate in Canada over the environmental impact of tapping Alberta’s oil sands.

Critics view the sands as a particularly dirty energy source. Similar objections drove efforts to block the Keystone XL pipeline from Alberta to the United States.

Environmentalists and some Indigenous groups have strongly opposed the expansion of the pipeline, citing environmental concerns. The province of British Columbia is trying to block it in the courts.

But the oil industry and the Alberta government argue that the expansion would bring needed jobs and help the economy.

David Ljunggren and Rod Nickel of Reuters reported that the deal is a bid to save the project:

Finance Minister Bill Morneau said purchasing the pipeline was the only way to ensure that a planned expansion could proceed. The pipeline, running from the oil sands of Alberta to a port in the Pacific province of British Columbia, would allow Canadian crude to gain greater access to foreign markets and higher prices.

Kinder Morgan Canada gave Ottawa until May 31 to come up with reassurances it could press ahead with plans to more than double the capacity of the existing pipeline amid efforts by British Columbia to block construction.

The company also faced opposition from environmentalists and aboriginal groups who worried about the pipeline spilling its tar-like heavy oil.

Rachel Aiello of CTV News reported that the Canadian government will eventually sell the pipeline to other owners:

After the sale is complete—anticipated this August—the federal government will pick up the construction before selling it to a new “long-term” owner or owners, Finance Minister Bill Morneau announced alongside Natural Resources Minister Jim Carr in an early morning press conference Tuesday.

Morneau said Indigenous groups, pension funds, and “multiple” others have expressed interest in the project. He described the $4.5 billion buy-out as a “fair price for Canadians,” and said the commercial agreement is a “sound investment opportunity.”

“That’s why we chose not to provide a subsidy to Kinder Morgan, but rather to enter into a commercial agreement that will make the most of the economic potential of this project. It’s an agreement that we believe will deliver a real return on investment for the benefit of British Columbians, Albertans and all Canadians,” Morneau said.

Additional spending on construction is anticipated, but the federal ministers wouldn’t speak to what the final price tag could be, other than saying it will involve a “user pay approach,” that sees oil companies chip in. The expansion had been estimated at $7.4 billion.