Canada purchases Trans Mountain pipeline project for $4.5B

Prime Minister Justin Trudeau.					Charles Krupa  AP

Prime Minister Justin Trudeau. Charles Krupa AP

"I'm not sure it should be the last resort, that there weren't other options or aren't other options available to the federal government". "This project has more certainty than ever before".

The Canadian pipeline industry welcomes news Tuesday that the Trans Mountain expansion pipeline is more likely to be built, but expressed grave misgivings over the federal government's decision to buy both the expansion and the existing line in order to achieve that goal.

It is flawed economically because it is predicated on the assumption that the world - particularly China - is desperate to buy high-cost bitumen from the Alberta oil sands. "Now they [the Liberals] have left all their eggs in the Kinder Morgan basket". The proposal called for twinning an existing pipeline that runs from Edmonton, Burnaby, B.C. and would almost triple its output from 300,000 barrels a day to almost 900,000 barrels a day.

North American oil prices are marching toward $65 U.S. a barrel this month, giving the industry a boost after the market collapsed three years ago. In the event of spills, it is much more hard to clean up.

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.

But even if the Keystone XL pipeline is built, Canada is still selling 99% of its oil to refineries in the USA and that narrow market means they now get far less per barrel than they would if they had access to an alternative market. In practice, it was not.

Opponents of the pipeline are concerned about the risk of oil spills from tankers along Canada's pristine Pacific coast impacting fisheries and tourism.

The only difference now is that pipeline critics will be demonstrating against a federal Crown corporation rather than a privately owned US company.

Nationally, the report said economic growth is expected to be slower. "But, with the recent rally in oil prices, there are upside risks to the forecast".

A celebratory Notley told reporters the province's share would only be paid once the project is completed and oil is flowing, with Alberta receiving an equity share in the project in return.

Companies that have already invested heavily in the oil sands will continue to mine bitumen at nearly any price in an effort to offset their fixed costs. Similar objections drove efforts to block the Keystone XL pipeline from Alberta to the United States... "The federal government has responded and that's their business", Horgan said.

Alberta's NDP government is prepared to put $2 billion forward to help backstop the expansion of the newly-nationalized Trans Mountain pipeline but there are few details about how the province's potential investment may play out.

Presumably, the cost to the new owners - us - will be about the same.

But Horgan said the responsibility is now squarely on the federal government.

Prime Minister Justin Trudeau's government has just signed up to captain the Titanic of tar sands oil pipelines, putting it on a collision course with its commitments to Indigenous rights and the Paris climate agreement.

"We said we would meet the deadline".

In fact, the problems facing pipelines today are much deeper.

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.

Thomas Walkom is a Toronto-based columnist covering politics.

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