The Liberal government announced Tuesday that it would buy the assets associated with the Trans Mountain pipeline project from US -based Kinder Morgan.
Finance Minister Bill Morneau unveiled the government's long-awaited, big-budget strategy on Tuesday to save the plan to expand the oilsands pipeline. He insists there is no contradiction between fighting for the environment and defending Canada's oil industry and the economic benefits it brings.
Kinder Morgan will proceed on twinning the pipeline while the sale is being finalized. "We think that today's announcement is based on extraordinary circumstances", Tim McMillan, CEO of the Canadian Association of Petroleum Producers, said in a press conference Tuesday. "The only (way) in our estimation that that can be done is through exerting our jurisdiction by purchasing the project".
Morneau said that while the government will listen to bidders for the pipeline in the short-term, its sale will depend on being certain that it will get built.
Ottawa has said it does not intend to own the project in the long-term.
The move is a calculated political risk for Prime Minister Justin Trudeau, who has embraced the Paris environmental accord and the need for Canada to fight climate change.
In 2007, Kinder Morgan reported to the National Energy Board that it valued the Trans Mountain pipeline system at $550 million. But British Columbia has refused to yield. Vancouver Quadra MP Joyce Murray said Trans Mountain takeover is not a "popular decision" among her constituents.
Discussing the plan on Tuesday, Finance Minister Bill Morneau said the government acted to remove political uncertainty and ensure the project goes forward as the summer construction season nears. "So the additional investments will be dealt with in that way", Morneau said. The decision was seen as a possible way to stop building the pipeline, even if it was approved on paper. The project will cost an estimated $7.4 billion more to finish.
Canada's oil sector has been stung in the past year as foreign energy companies retreated amid concerns about the environmental toll, high production costs and a risky regulatory regime.
George, who has previously travelled to speak to Kinder Morgan shareholders, said he can understand why Kinder Morgan wants out of the project: "It's not a good investment for the shareholders".
Kean did not say why he chose to sell rather than absorb the risk of further delays.
But even if the Keystone XL pipeline is built, Canada is still selling 99% of its oil to refineries in the USA and that narrow market means they now get far less per barrel than they would if they had access to an alternative market. "We support improving market access to ensure Canada achieves fair recognition and full value for its energy resources". Like their national counterparts, the province's Greens adamantly oppose the Trans Mountain pipeline.
"That is how we pay for the services that we provide to our province". But $4.5 billion won't cover the future construction costs. The contribution will convert into equity in the pipeline.
Premier Rachel Notley said she hopes that construction on the project will begin promptly despite continued court challenges from British Columbia.