Trudeau government to buy troubled Trans Mountain pipeline for $4.5 billion

$4.5B Trans Mountain plan won't mean Ottawa in pipeline business, says Morneau

$4.5B Trans Mountain plan won't mean Ottawa in pipeline business, says Morneau

Morneau criticized the New Democratic Party (NDP) government in British Columbia for creating "political uncertainty" and making it hard for Kinder Morgan to proceed with the project.

The forecast price of oil, in particular, West Texas Intermediate which is averaging at US$70 a barrel could be an "upside risk to the forecast", the report said.

Mr Morneau said the deal with Kinder Morgan is likely to be closed by August 2018.

The time is not right for either company to take on a project like Trans Mountain, said Laura Lau, who helps manage C$1.5 billion in assets, including shares of TransCanada and Enbridge, at Brompton Corp.in Toronto.

Financing for this purchase will come from Export Development Canada.

Canada only has two options for selling that oil.

Speaking to reporters in Vancouver, Premier John Horgan said the federal government's offer to take over the pipeline from Kinder Morgan doesn't change his government's position and it will proceed with its reference case to the B.C. Court of Appeal.

However, the $4.5-billion loan may not be enough to see the pipeline through.

The price tag is less than the company's estimated $7.4-billion projected cost but taxpayers will be on the hook for $4.5 billion according to details released by Finance Minister Bill Morneau and Natural Resources Minister Jim Carr at a news conference Tuesday. His days of getting out of Canada to bask in the adoring selfies are over. Polls suggest that most Canadians support the construction of the pipeline, including more than half of the residents of B.C.

Opponents of the pipeline are concerned about the risk of oil spills from tankers along Canada's pristine Pacific coast impacting fisheries and tourism.

The federal government can in theory step in and disallow any provincial laws that British Columbia might use to block the pipeline, but this provision in the Canadian constitution has not been used since the 1940s.

Nationally, the report said economic growth is expected to be slower.

Environmentalists also said that Prime Minister Justin Trudeau was taking Canada in the wrong direction and turning it into a fossil fuel company.

His Liberals face a hard balancing act in trying to champion climate action while supporting growth in Canada's oil sector. "And so here we are at the eleventh hour, they waited until Kinder Morgan was ready to walk away, and their answer is to throw billions of taxpayers dollars at this project".

Green Party MP Elizabeth May, representing Saanich-Gulf Islands, and Victoria NDP MP Murray Rankin both panned the federal move. In order to expand deliveries from the tar sands area, there was an attempt to build the Keystone XL pipeline, but the Obama administration killed that by denying a permit for the pipeline to cross the border.

The purchase, for 4.5 billion Canadian dollars, ensures that the Trans Mountain pipeline, which carries oil from Alberta to a port in a suburb of Vancouver, British Columbia, will begin a planned expansion this summer.

In recent months, thousands have protested against the project across Canada. "It spoke to the transportation of diluted bitumen through British Columbia by rail or by pipe".

Several First Nations have alleged in court that Trudeau's approval of the project was not legal since the government failed in its constitutional duty to consult them.

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