Canada’s federal government announced this morning that it plans to buy a controversial pipeline that runs from the Alberta oil sands to the Pacific Coast to ensure it gets built.
Prime Minister Justin Trudeau’s government plans to spend $3.4 billion to purchase Kinder Morgan’s Trans Mountain pipeline. The pipeline expansion would triple the capacity of an existing line to ship oil extracted from the oil sands in Alberta across the snow-capped peaks of the Canadian Rockies to a terminal outside Vancouver, resulting in a seven-fold increase in the number of tankers in the shared waters between Canada and Washington state.
Facing stiff environmental opposition from British Columbia’s provincial government and activists, Houston-based Kinder Morgan earlier halted essential spending on the project and said it would cancel it altogether if the national and provincial governments could not guarantee it.
The pipeline would allow Canada to diversify and increase exports to Asia, where it could command a higher price. Canada has the world’s third-largest oil reserves but 99% of its exports now go to refiners in the U.S., where limits on pipeline and refinery capacity mean Canadian oil sells at a discount.
Steve Kean, chairman and chief executive of Kinder Morgan Canada Ltd., says the deal represents the best opportunity to complete the expansion project.
