Natural Resources Minister James Carr, left, and Finance Minister Bill Morneau leave a cabinet meeting on route to the National Press Theatre in Ottawa on Tuesday, May 29, 2018. THE CANADIAN PRESS/Sean Kilpatrick

Liberal government to buy Trans Mountain pipeline for $4.5B

Finance Minister Bill Morneau says Canada is going to buy the Trans Mountain pipeline and all of Kinder Morgan Canada’s core assets for $4.5 billion.

The federal Liberal government is spending $4.5 billion to buy Trans Mountain and all of Kinder Morgan Canada’s core assets, Finance Minister Bill Morneau said Tuesday as he unveiled the government’s long-awaited, big-budget strategy to save the plan to expand the oilsands pipeline.

In return, Kinder Morgan will go ahead with its original plan to twin the pipeline this summer while the sale is finalized, which likely won’t happen until August, Morneau told a news conference in Ottawa.

Once the sale is complete, he said, Canada will continue the construction on its own, with a view to eventually selling the whole thing down the road, once market conditions would allow it to get the best price.

Morneau presented the options during an early-morning cabinet meeting Tuesday before ministers signed off on the chosen option, which comes just days before the company’s self-imposed May 31 deadline and is still subject to the approval of Kinder Morgan shareholders.

“We believe this is the best way to protect thousands of well-paying jobs and the safest and most effective way to get our resources to world markets,” Morneau told a news conference in Ottawa after the meeting, Natural Resources Minister Jim Carr at his side.

“Make no mistake: this is an investment in Canada’s future.”

Pressed about why the federal government’s $4.5-billion price tag was so much lower than Kinder Morgan’s stated $7.4-billion project value, Morneau said Ottawa was purchasing all the relevant assets — but he studiously avoided saying whether construction would increase costs.

“We are purchasing the assets; we are purchasing the existing assets, and the investment in the twinning of that pipeline, and those assets are what is required for us to move forward with the expansion,” he said.

“It allows us to move forward with the investments required to get the expansion completed and delivering the value that we know it can deliver to the Canadian economy.”

Related: Pipeline supporters rally across B.C.

Export Development Canada will finance the purchase, which includes the pipeline, pumping stations and rights of way along the route between Edmonton and Vancouver, as well as the marine terminal in Burnaby, B.C., where oil is loaded onto tankers for export.

Morneau says the federal government does not plan to be a long-term owner and is in negotiations with interested investors, including Indigenous communities, pension funds and the Alberta government, which will provide funding for any unexpected costs that arise during construction.

“To investors considering Canada as a place to build big, important, transformative projects like the Trans Mountain expansion, we want you to know that you have a partner in Ottawa,” Morneau said.

“One who not only respects the rule of law, but who understands the challenges you are up against and will work with you to find solutions that work for everyone.”

Alberta Premier Rachel Notley cheered the news on Twitter.

“This is a major step forward for all Canadians. We have met the deadline,” she tweeted. “This project has more certainty than ever before. We won’t stop until the job is done!”

The plan — similar to how Canada financed and managed shares in General Motors and Chrysler in 2009 during the financial crisis — will include a new Crown corporation to manage the project.

The deal brings some certainty to an expansion project that has been on the rocks ever since B.C. went to court in hopes of blocking it, fearing the impact of a spill of diluted bitumen, the raw output from Alberta’s oilsands.

Ottawa has the constitutional authority to build interprovincial projects like pipelines, but B.C. Premier John Horgan has gone to court to get a judge to weigh in on whether B.C.’s jurisdiction for the environment would allow him to regulate what flows through the pipeline.

The ensuing uncertainty, paired with vociferous opposition from environmental groups and some Indigenous communities in B.C., prompted Kinder Morgan to halt investment until the federal government could inject some certainty into the project.

“The previous government spent 10 years pitting the environment and the economy against each other; they pitted us against each other. It polarized us. That is not who we are,” Carr told the news conference.

“The majority of Canadians support this project. The majority of Canadians understand that we are in a transition to a clean-growth century, and we will not get there overnight. But we will get there.”

Ottawa is pressing ahead, firmly of the opinion there is no doubt about its jurisdiction. It is also confident it will prevail in a Federal Court challenge by some Indigenous communities over its approval of the pipeline, a ruling on which is due any day.

A Finance Department official says that as a Crown project in the national interest, Canada has special allowances to proceed that may not be available to a private-sector company.

Canada approved the project in November 2016, following an expanded environmental review process that included additional consultations with Indigenous communities and assessing the amount of additional emissions likely to result from additional production.

Prime Minister Justin Trudeau has long insisted the project is in Canada’s national interest and is a pivotal part of the country’s economic future.

Canada loses $15 billion every year on the sale of oil because the U.S. remains its only export customer, resulting in a lower price, Trudeau argues. A lack of capacity in pipelines or in rail cars to ship oil produced in Alberta is also hurting Canada’s energy sector.

Related: Trans Mountain pipeline: Is it worth the risk?

Related: Elizabeth May pleads guilty, fined $1,500 in pipeline protests

Mia Rabson, The Canadian Press

Like us on Facebook and follow us on Twitter.

Just Posted

Nathan Cullen named Parliamentarian of the Year

Skeena-Bulkley Valley MP won the top-title Nov. 5

Province not doing enough for forestry sector, say Liberals

Although Minister of Forests says government working to diversify industry, rural economies

Column: how to bring young blood to ranching

A Young Agarians program seeks to partner new ranchers with old

Stolen truck involved in fatal collision on Highway 16

Wednesday’s two-vehicle crash killed one man, 23, and injured two others

Local company Northern Homecraft wins big at Northern B.C. awards

Vanderhoof company won in two categories for homes built in Fort St. James area

1st Indigenous woman to start Canadian airline looks to B.C.’s remote regions

Teara Fraser is the first Indigenous woman in Canada to start her own airline, called Iskwew Air

Bankruptcies in British Columbia on the rise

Consumer bankruptcies climbed by 6. 1 per cent in August 2018 from the same month last year.

22 public toilets in Victoria: 136 people currently peeing

World Toilet Day floats some serious health issues

Calgary Stampeders back to Grey Cup with 22-14 win over Winnipeg Blue Bombers

Calgary was favoured to win the 2017 and 2016 Grey Cups, but lost to the Toronto Argonauts and Ottawa Redblacks respectively.

‘A giant step forward’: new $10 bill featuring Viola Desmond to enter circulation

A new $10 banknote featuring Viola Desmond’s portrait will go into circulation, just over 72 years after she was ousted from the whites-only section of a movie theatre in New Glasgow, N.S.

Searchers in California wildfire step up efforts; 77 dead

Trump arrived at the oceanside conclave Saturday afternoon after visiting Northern California to survey the wildfire damage in the town of Paradise.

Trump says ‘no reason’ for him to hear Khashoggi death tape

“It’s a suffering tape, it’s a terrible tape. I’ve been fully briefed on it, there’s no reason for me to hear it,” Trump said in the interview.

Canada Post calls for ‘cooling off’ period to allow for mediated talks

The proposal came as Canada Post workers continued their rotating strikes Monday after rejecting the Crown agency’s latest offer.

Metro Vancouver homicide detectives busy after separate weekend deaths

Homicide detectives in Metro Vancouver are investigating separate cases involving two deaths they say appear to be either targeted or suspicious.

Most Read