It’s too early to celebrate. The $7.4 billion oil pipeline expansion from Edmonton to Burnaby B.C. isn’t built yet.
It’s true Kinder Morgan Canada is a willing seller, for $4.5 billion, of its equity including Trans Mountain Pipeline, and the federal government is a willing buyer.
But the seller has a gun to its head and the buyer, to state it kindly, is naïve about the obstacles and the costs ahead.
“This does not change our course,” said B.C. Premier John Horgan after the federal government announced its offer. The anti-pipeline protesting groups said the same.
Horgan will continue the B.C. government’s court challenges.
The score in court is 16-0 in favour of the pipeline, but B.C., and anyone who joins the legal battle will persist.
The protesters, who think the nobility of their cause to halt the climate change they claim oilsands brings about exempts them from the law, will continue to obstruct any which way they can.
If Prime Minister Justin Trudeau thinks that federal ownership would mean sunny days and sunny ways for the project, he is wrong.
He was conspicuous by his absence from the announcement and the media frenzy that followed.
The sale is structured so that the federal government could flip the ownership back to the private sector before the end of the year.
But they would be selling an expansion project that, today, has an unknown completion date and a cost of $7.4 billion and rising. Find a willing buyer for that risk!
There is one group that is happy with the federal government’s purchase of the company.
The shareholders of Kinder Morgan Canada will receive $12 per share, after paying capital gain. The stock market liked the deal, boosting the share price from $16 to $17 in the first hours of trading after the announcement.
The price of $17 per share happens to be what the shares cost in the initial public offering a year ago when Kinder Morgan Canada went public.
Whoever owns the pipeline, the political battle has always been and is still about the future of the Alberta oilsands and national climate change policy.
If the bitumen is produced, the growth markets are in Asia and India. That means pipelines to ocean ports.
Even if the world becomes fossil fuel-free later in the century, its seven billion people need 96 million barrels of oil a day for the foreseeable future.
The oilsands could provide decades of economic activity, jobs and royalties in Alberta.
The economic difference for Canada as a nation is also significant.
Trudeau’s government stopped the Northern Gateway line from Alberta to Prince Rupert.
It killed the Energy East project to take Alberta oil to Quebec and the Atlantic, backing out imported oil.
It threw the National Energy Board’s credibility under the bus.
The Keystone XL pipeline is still stalled in the Nebraska regulatory system and will be at least until after the November elections in the U.S.
So, pipeline access to ocean transport for oilsands production is all down to the Trans Mountain expansion.
- Frank Dabbs is a veteran political and business journalist and author.
