The federal Liberal government will buy the Trans Mountain pipeline system and the expansion project for $4.5 billion.
Federal Finance Minister Bill Morneau and Natural Resources Minister Jim Carr made the surprise announcement at a news conference today (May 29, 2018) after a cabinet meeting. Current pipeline owner Kinder Morgan will proceed with construction this summer while the sale is being finalized.
Morneau called it “an investment in Canada’s future.” He said the government intends to sell the pipeline to the private sector later.
Kinder Morgan had set a May 31 deadline for clarity on the future of the project as the B.C. government decided to go to court on provincial rights when it comes to protecting the environment.
In its own news release, Kinder Morgan Canada Ltd. announced the purchase agreement, saying the federal government has agreed to work with the board to seek a third party buyer for the Trans Mountain Pipeline system and TMEP through July 22, 2018.
As part of the agreement, the Government of Canada will fund the resumption of planning and construction work by guaranteeing Trans Mountain’s expenditures under a separate federal government recourse credit facility until the transaction closes.
The news release said the parties expect to close the transaction in the late in the third quarter or early in the fourth quarter of 2018, subject to KML shareholder and applicable regulatory approvals.
“We are pleased to reach agreement on a transaction that benefits the people of Canada, TMEP shippers and KML shareholders,” said KML chairman and chief executive officer Steve Kean.
“The outcome we have reached represents the best opportunity to complete TMEP and thereby realize the great national economic benefits promised by that project.
“Our Canadian employees and contractors have worked very hard to advance the project to this critical stage, and they will now resume work in executing this important Canadian project.”
According to the Kinder Morgan statement, it will continue to manage a portfolio of strategic infrastructure across Western Canada, including:
- An integrated network of crude tank storage and rail terminals in Alberta that is one of the largest in the region;
- The crude terminal facilities constitute the largest merchant terminal storage facility in the Edmonton market and the largest origination crude by rail loading facility in North America;
- The Vancouver Wharves Terminal, the largest mineral concentrate export/import facility on the west coast of North America; and,
- The Cochin Pipeline system that transports light condensate originating from the United States to Fort Saskatchewan, Alberta.
The company will hold a webcast conference later today on the announcement.