OTTAWA-Canada on Tuesday struck a multibillion deal with Kinder Morgan Inc.to take ownership of the Trans Mountain pipeline project in a bid to save the project. A lack of capacity in pipelines or in rail cars to ship oil produced in Alberta is also hurting Canada's energy sector.
"To guarantee the summer construction season for the workers who are counting on it, and to ensure the project is built to completion in a timely fashion, the federal government has reached an agreement with Kinder Morgan to purchase the existing Trans Mountain pipeline, and the infrastructure related to the Trans Mountain expansion project", Morneau told reporters in Ottawa.
When the sale is finished, Canada will continue construction on its own, with plans to eventually sell it all in the future once market conditions improve.
The government is also lobbying hard in the United States this week since President Donald Trump only exempted Canada and Mexico from steel import tariffs until Friday. Canada has the world's third largest oil reserves but 99 percent of its exports now go to refiners in the US, where limits on pipeline and refinery capacity mean Canadian oil sells at a discount.
The project has pitted Alberta against coastal British Columbia, where concerns about fisheries, real estate values, tourism and ocean ecology are high. Vancouver Mayor Gregor Robertson calls the pipeline an unacceptable risk that threatens 10,000 jobs in the harbor.
The Trans Mountain expansion would nearly triple capacity to 890,000 barrels of oil on a line running from Alberta to a terminal near Vancouver.
"Canada will work with investors to transfer the project, and related assets, to a new owner or owners in a way that ensures that the project's construction and operation will proceed in a manner that protects the public interest", he said.
Steve Kean, chairman and chief executive of Kinder Morgan Canada Ltd., said the deal represents the best opportunity to complete the expansion project.
In a statement, Kinder Morgan said it was alerted to an operational disruption through its internal safety system in the early hours of Sunday morning.
Trudeau approved the expansion, arguing that it was "economically necessary" and enabled him to overcome opposition to a carbon tax plan that will help Canada cut its greenhouse emissions.
The pipeline plan has already started a war of words, litigation and legislation between the two provinces, even though, for the first time in Canadian history, both are governed by the New Democratic Party, the most left-leaning party in Canada's political mainstream.
Alberta Premier Rachel Notley cheered the news on Twitter. "This project has more certainty than ever before".