Natural Resources Minister James Carr, left, and Finance Minister Bill Morneau leave a cabinet meeting on route to the National Press Theatre in Ottawa on Tuesday, May 29, 2018. THE CANADIAN PRESS/Sean Kilpatrick

Liberal government to buy Trans Mountain pipeline for $4.5B

Finance Minister Bill Morneau says Canada is going to buy the Trans Mountain pipeline and all of Kinder Morgan Canada’s core assets for $4.5 billion.

The federal Liberal government is spending $4.5 billion to buy Trans Mountain and all of Kinder Morgan Canada’s core assets, Finance Minister Bill Morneau said Tuesday as he unveiled the government’s long-awaited, big-budget strategy to save the plan to expand the oilsands pipeline.

In return, Kinder Morgan will go ahead with its original plan to twin the pipeline this summer while the sale is finalized, which likely won’t happen until August, Morneau told a news conference in Ottawa.

Once the sale is complete, he said, Canada will continue the construction on its own, with a view to eventually selling the whole thing down the road, once market conditions would allow it to get the best price.

Morneau presented the options during an early-morning cabinet meeting Tuesday before ministers signed off on the chosen option, which comes just days before the company’s self-imposed May 31 deadline and is still subject to the approval of Kinder Morgan shareholders.

“We believe this is the best way to protect thousands of well-paying jobs and the safest and most effective way to get our resources to world markets,” Morneau told a news conference in Ottawa after the meeting, Natural Resources Minister Jim Carr at his side.

“Make no mistake: this is an investment in Canada’s future.”

Pressed about why the federal government’s $4.5-billion price tag was so much lower than Kinder Morgan’s stated $7.4-billion project value, Morneau said Ottawa was purchasing all the relevant assets — but he studiously avoided saying whether construction would increase costs.

“We are purchasing the assets; we are purchasing the existing assets, and the investment in the twinning of that pipeline, and those assets are what is required for us to move forward with the expansion,” he said.

“It allows us to move forward with the investments required to get the expansion completed and delivering the value that we know it can deliver to the Canadian economy.”

Related: Pipeline supporters rally across B.C.

Export Development Canada will finance the purchase, which includes the pipeline, pumping stations and rights of way along the route between Edmonton and Vancouver, as well as the marine terminal in Burnaby, B.C., where oil is loaded onto tankers for export.

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, which will provide funding for any unexpected costs that arise during construction.

“To investors considering Canada as a place to build big, important, transformative projects like the Trans Mountain expansion, we want you to know that you have a partner in Ottawa,” Morneau said.

“One who not only respects the rule of law, but who understands the challenges you are up against and will work with you to find solutions that work for everyone.”

Alberta Premier Rachel Notley cheered the news on Twitter.

“This is a major step forward for all Canadians. We have met the deadline,” she tweeted. “This project has more certainty than ever before. We won’t stop until the job is done!”

The plan — similar to how Canada financed and managed shares in General Motors and Chrysler in 2009 during the financial crisis — will include a new Crown corporation to manage the project.

The deal brings some certainty to an expansion project that has been on the rocks ever since B.C. went to court in hopes of blocking it, fearing the impact of a spill of diluted bitumen, the raw output from Alberta’s oilsands.

Ottawa has the constitutional authority to build interprovincial projects like pipelines, but B.C. Premier John Horgan has gone to court to get a judge to weigh in on whether B.C.’s jurisdiction for the environment would allow him to regulate what flows through the pipeline.

The ensuing uncertainty, paired with vociferous opposition from environmental groups and some Indigenous communities in B.C., prompted Kinder Morgan to halt investment until the federal government could inject some certainty into the project.

“The previous government spent 10 years pitting the environment and the economy against each other; they pitted us against each other. It polarized us. That is not who we are,” Carr told the news conference.

“The majority of Canadians support this project. The majority of Canadians understand that we are in a transition to a clean-growth century, and we will not get there overnight. But we will get there.”

Ottawa is pressing ahead, firmly of the opinion there is no doubt about its jurisdiction. It is also confident it will prevail in a Federal Court challenge by some Indigenous communities over its approval of the pipeline, a ruling on which is due any day.

A Finance Department official says that as a Crown project in the national interest, Canada has special allowances to proceed that may not be available to a private-sector company.

Canada approved the project in November 2016, following an expanded environmental review process that included additional consultations with Indigenous communities and assessing the amount of additional emissions likely to result from additional production.

Prime Minister Justin Trudeau has long insisted the project is in Canada’s national interest and is a pivotal part of the country’s economic future.

Canada loses $15 billion every year on the sale of oil because the U.S. remains its only export customer, resulting in a lower price, Trudeau argues. A lack of capacity in pipelines or in rail cars to ship oil produced in Alberta is also hurting Canada’s energy sector.

Related: Trans Mountain pipeline: Is it worth the risk?

Related: Elizabeth May pleads guilty, fined $1,500 in pipeline protests

Mia Rabson, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

BCHL: Bulldogs pick up one win on weekend road trip

Tanner Pochipinski earns first career BCHL goal

Steelhead, Huu-ay-aht submit plans for Kwispaa LNG Project

Total plan would cost $10 billion, last 25 years

Three strong earthquakes reported off Vancouver Island

The quakes, all measuring more than 6.0 on the richter scale, were about 260 kilometres west of Tofino

Mother passes SD70 trustee torch to daughter in Port Alberni

Jane Jones loses after one term, but proud of her daughter Connie Watts

ELECTION 2018: Sharie Minions named Port Alberni mayor

Haggard, Solda, Washington, Poon, Paulson and Corbeil named councillors

B.C. sailor surprised by humpback whale playing under her boat

Jodi Klahm-Kozicki said the experience was ‘magical’ near Denman Island

WWE star Roman Reigns announces he has leukemia

Grappler formerly played in CFL

China opens mega-bridge linking Hong Kong to mainland

The $20 billion bridge took almost a decade to build while incurring major delays and cost overruns

Dangerous Cat 4 Hurricane Willa closing in on Mexico coast

Officials said 7,000 to 8,000 people were being evacuated from low-lying areas, mostly in Sinaloa state

Excessive speed named as cause of Taiwan train derailment

18 people were killed and at least 170 more were injured

Ovechkin has 4 points as Caps rough up Canucks 5-2

WATCH: Defending champs pick up impressive win in Vancouver

B.C. government moves to tighten resource industry regulations

New superintendent will oversee engineers, biologists, foresters

Election watchdog seeks digitally savvy specialists to zero in on threats

Move follows troublesome evidence of online Russian interference in the 2016 U.S. election

Most Read