The Government of Canada has announced it will purchase the Trans Mountain pipeline from Kinder Morgan for $4.5 billion. The move paves the way for construction on the Tran Mountain Expansion Project to begin this summer.
The Canadian Association of Petroleum Producers (CAPP) is pleased the construction of this project will get underway, showing confidence in Canada’s energy sector and ensuring full market value for the country’s natural resources. This is a long-term commitment in the future of the country’s oil and natural gas industry that will enable the creation of jobs and prosperity for a new generation of Canadians.
“Ottawa’s investment in Trans Mountain demonstrates confidence in Canada’s energy sector,” says CAPP president and CEO Tim McMillan. “The project was approved on its merits and in the best interests of the nation. This is a firm commitment from the highest level of government to build the pipeline in a timely fashion.”
McMillan notes that the government’s political and financial backing guarantees construction the pipeline will resume, and provides industry the assurance it has been seeking. Now that this project has the full backing of the federal government, CAPP expects Ottawa to be committed to overcome any legal, political, or activist barriers that may remain.
While the federal government’s commitment is a step forward, CAPP notes that these are exceptional circumstances. The Trans Mountain expansion pipeline was always economically viable for private-sector investment based on the long-term returns if would have for Canada. If the government wants this to be a success, it must ensure the project is managed responsibly to prevent cost overruns due to continued opposition from the B.C. government and organized activists.
In its announcement, the federal government indicated that while it will pick up the construction of the project, it plans to eventually sell Trans Mountain back to private owners.
McMillan supports this plan, saying “We have also heard the very important commitment from government that the project will move back into the private sector – where it belongs.”
McMillan adds that Trans Mountain is critical infrastructure needed to move Canadian energy to world markets – and to restore investor confidence in Canada’s economy and political system.
“Building the Trans Mountain expansion is the first step to making Canada competitive for investment in the global energy market. It will begin to reduce our reliance on one customer and enable Canadians to get a fairer price for their natural resources,” says McMillan.