OTTAWA BUYING PIPELINE
Alberta willing to commit $2B to ensure Trans Mountain expansion gets built
The federal government’s blockbuster purchase of the Trans Mountain pipeline expansion allows construction of the embattled project to move forward, but there is still uncertainty about many aspects of the deal, including Alberta’s potential $2-billion commitment.
Questions about the pipeline purchase include what circumstances would lead the Alberta government to contribute to the project, how much construction will actually cost and what privatesector investor will eventually step forward.
Federal Finance Minister Bill Morneau announced Tuesday that Ottawa will spend $4.5 billion to buy the pipeline and Kinder Morgan Canada’s core assets, with planned work to twin the pipeline getting underway immediately at an undisclosed further additional cost. The federal move has the full backing of Premier Rachel Notley, with Alberta also committing up to $2 billion to cover costs that arise from “unforeseen circumstances.”
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 stake in the project in return for any investment it makes.
However, the premier said she could not provide any more information at this point about what would have to happen for the government to pony up pipeline cash.
“We’re still looking at what I would say are commercially sensitive touch points. We’ll probably be able to roll out those details, that information, a bit more in the days to come but I’m not going to do it today,” said Notley, who noted the province may end up putting no money toward the project.
United Conservative Party Leader Jason Kenney, who has been sharply critical of the provincial and federal governments’ handling of the pipeline file, said it’s regrettable that “a huge taxpayer bailout” was needed, but the Opposition is prepared to conditionally support Alberta’s $2-billion pledge, depending on the details.
EDMONTON Congratulations on your purchase of the Trans Mountain pipeline!
When the project is complete, each Canadian will own 5.87 centimetres of the 2,130 km of pipeline carrying diluted bitumen from Strathcona County, just outside of Edmonton, to Burnaby, B.C.
Don’t get too excited — it’s only a sliver of the entire thing. Maybe you can name it Dilbert or something. Sing it a song. Wrap it in ribbon. You do you, fellow Canadian.
The federal price tag on your pipeline comes to $4.5 billion (that’s $124 per person). The expansion, which twins an existing pipe, is estimated to cost an additional $7.4 billion. All told, that’s around $328 per Canadian for your piece.
Premier Rachel Notley announced Alberta would invest up to $2 billion to get the project built. That can be converted to equity if necessary, she said.
The original 1,150-km Trans Mountain Pipeline was built in 1953. It was expanded in 1957, then again between 2006 and 2008. The $7.4-billion twinning would run pipe over a slightly shorter 980 km.
This expansion adds 12 new pump stations, along with 19 new tanks to an existing storage terminal in Burnaby, one tank in Sumas and four tanks in Edmonton.
It will boost capacity from 300,000 to 890,000 barrels per day. That’s enough oil to fill more than 56 Olympic swimming pools. It’s also equivalent to hundreds of millions of bottles of wine (from B.C. or otherwise).
Your pipeline — let’s call it Dilbert — also comes with a lifetime guarantee of controversy, garnering the attention of the prime minister, premiers, industry, activists and everyone else. Hooray!
Since rumblings of an AlbertaB.C. trade war started in February, the ongoing political standoff included a B.C. wine ban in Alberta, a sudden trip to Ottawa, court cases and an ominous deadline set by pipeline owner Kinder Morgan.
Plus, don’t forget the legislation to turn off the taps to B.C. That bill — which gave unprecedented authority to Alberta’s energy minister — is no longer likely to be enacted, Notley said.
Keep in mind, fellow Canadian, Dilbert might not always be yours. Ottawa plans to find a buyer for the pipeline when market conditions allow it to get the best price, said federal Finance Minister Bill Morneau.
And one more thing — there’s no return policy.