The Liberal government will buy the Trans Mountain pipeline and related infrastructure for $4.5 billion, and could spend billions more to build the controversial expansion.

Finance Minister Bill Morneau announced details of the agreement reached with Kinder Morgan at a news conference with Natural Resources Minister Jim Carr this morning.

“Make no mistake, this is an investment in Canada’s future,” Morneau said.

Morneau said the project is in the national interest, and proceeding with it will preserve jobs, reassure investors and get resources to world markets. He could not say exactly what additional costs will be incurred by the Canadian public to build the expansion, but suggested a toll paid by oil companies could offset some costs and that there would be a financial return on the investment.

Kinder Morgan had estimated the cost of building the expansion would be $7.4 billion, but Morneau insisted that the project will not have a fiscal impact, or “hit.”

He said the government does not intend to be a long-term owner, and at the appropriate time, the government will work with investors to transfer the project and related assets to a new owner or owners. Investors such as Indigenous groups and pension funds have already expressed interest, he said.

Until then, it will proceed under the ownership of a Crown corporation. The agreement, which must still be approved by Kinder Morgan’s shareholders, is expected to close in August.

Play

Politics News

Morneau says government is buying Trans Mountain pipeline

Finance Minister Bill Morneau explains the reasons behind the government’s decision to buy the Trans Mountain pipeline for $4.5 billion. 2:21

Conservative Leader Andrew Scheer said today’s decision does nothing to advance the project, since the legal questions and barriers still remain. He said the government has failed to take action to ensure certainty around the expansion by resolving jurisdictional issues.

“This is a very, very sad day for Canada’s energy sector. The message that is being sent to the world is that in order to get a big project build in this country, the federal government has to nationalize a huge aspect of it,” he said.

The pipeline expansion project has faced intense opposition from the B.C. government, environmental activists and Indigenous groups.

Carr said the plan does not sacrifice the environment for the economic benefits.

“Canadians want both and we can have both,” he said.

‘Great economic benefits’

Kinder Morgan issued a statement that says the deal represents the best way forward for shareholders and Canadians.

“The outcome we have reached represents the best opportunity to complete Trans Mountain Expansion Project and thereby realize the great national economic benefits promised by that project,” said chairman and CEO Steve Kean.

“Our Canadian employees and contractors have worked very hard to advance the project to this critical stage, and they will now resume work in executing this important Canadian project.”

Green Party Leader Elizabeth May, who pleaded guilty Monday to criminal contempt for protesting the pipeline, tweeted that Kinder Morgan is “laughing all the way to the bank.”

Alberta Premier Rachel Notley called it “a major step forward for all Canadians.”

“This project has more certainty than ever before. We won’t stop until the job is done!” she tweeted.

Notley is expected to speak about the deal at 12 p.m. ET. CBCnews.ca will carry her remarks live.

Play

Politics News

Carr says Canadians can have a healthy planet and a strong economy

 LISTEN

00:00 01:48

Natural Resources Minister Jim Carr says that the Trans Mountain pipeline purchase can help Canadians achieve a clean environment and good jobs. 1:48

Trudeau also took to Twitter to praise the deal.

“Today, we’ve taken action to create and protect jobs in Alberta and B.C., and restart construction on the TMX pipeline expansion, a vital project in the national interest,” his post says.

Notley has been locked in a bitter dispute over the pipeline with B.C. Premier John Horgan.

Today, Horgan said a change of ownership doesn’t alter his concerns about a potential spill that could harm the coastal environment.

“The good news is I think I have a better chance of progress with a Crown corporation and a government that is responsive to people rather than a company that is only responsive to its shareholders,” he told CBC in Vancouver.

This morning, the Investment Industry Regulatory Organization of Canada announced a trading halt for Kinder Morgan Canada Limited because of “pending news.” The IIROC can impose a temporary suspension of trading in a security of a publicly listed company to ensure “a fair and orderly market.”

The government had looked at three options for moving the project forward:

• Compensating Kinder Morgan — or any other company — for financial losses caused by British Columbia’s attempts to block the project.
• The federal government buys, builds and then sells the expansion once the work is complete.
• The federal government buys the project from Kinder Morgan, then puts it on the market for investors willing to pick up the project and build it themselves.

Morneau’s announcement comes just two days before a deadline that had been set by Kinder Morgan. The company had said it needed clarity on a path forward for the project by May 31 or it would walk away from construction.

The original Trans Mountain pipeline was built in 1953. The expansion would be a twinning of the existing 1,150-kilometre pipeline between Strathcona County (near Edmonton), Alta., and Burnaby, B.C. It would add 980 kilometres of new pipeline and increase capacity from 300,000 barrels a day to 890,000 barrels a day.

According to Kinder Morgan’s project website, the construction and the first 20 years of expanded operations would mean a combined government revenue of $46.7 billion, with $5.7 billion for B.C., $19.4 billion for Alberta and $21.6 billion for the rest of Canada.