The Canadian government announced Tuesday that it will buy Kinder Morgan’s controversial Trans Mountain pipeline to ensure a planned expansion happens this summer.
The government announced the purchase for $3.4 billion after Prime Minister Justin Trudeau, a Liberal, held a Cabinet meeting in Ottawa.
“The Trans Mountain expansion project is of vital interest to Canada and Canadians,” Bill Morneau, the federal finance minister, told reporters after the meeting. “Our government’s position is clear: It must be built and it will be built.”
Trudeau approved the Trans Mountain expansion in 2016, arguing it was “economically necessary” and promising it would create tens of thousands of jobs.
But Texas-based company Kinder Morgan threatened last month to halt its proposed $7.4 billion expansion of the Trans Mountain pipeline because of opposition from the provincial government of British Columbia, which fears potential spills along a coastline that attracts tourists.
Kinder Morgan, America’s largest energy infrastructure company, had said British Columbia must drop its opposition to the project by the end of May or it would pull out from the project. The company said it stopped all “nonessential spending” on the project.
Steve Kean, CEO of Kinder Morgan Canada, said Tuesday that selling the pipeline to the government would ensure its completion.
“We’ve agreed to a fair price for our shareholders and we’ve found a way forward for this national interest project,” he told a conference call with financial analysts, according to the Associated Press.
The Trans Mountain expansion would nearly triple the amount of crude flowing from Alberta’s oil sands to a port near Vancouver, to 890,000 barrels a day from 300,000. Canada has the world’s third-largest oil reserves, and 99 percent of its exports go to refiners in the U.S.
Indigenous leaders, concerned about threats to their native lands, and environmentalists also oppose the expanded pipeline and some have threatened to stop it by chaining themselves to construction equipment.
“Today we found out that Prime Minister Justin Trudeau lied when he declared to the world he was a leader on climate change and reconciliation with Indigenous peoples,” said Tzeporah Berman, deputy director of Stand.earth, an environmental group. “Instead, he wants to spend billions of taxpayer dollars to bail out a declining industry — ignoring the thousands who have pledged to block the pipeline and sidestepping more than a dozen outstanding legal challenges.”
Trudeau projects himself as a leader on combating climate change who has called for a national carbon tax and said he would aim to “accelerate” his country’s efforts to meet the terms of the Paris Agreement, despite President Trump saying he will remove the U.S. from the accord.
The Canadian government plans to sell the expanded pipeline back to the private sector once it’s guaranteed that the line will be built.
