Government of Canada buys Kinder Morgan Pipeline

Government of Canada buys Kinder Morgan Pipeline

Government of Canada buys Kinder Morgan Pipeline

Ottawa is expected to funnel billions of dollars into the controversial pipeline expansion, which has an overall estimated price tag of $7.4 billion. Construction will continue through the 2018 season, and the federal government will transfer it to one or more new owners when "appropriate".

Steve Kean, chairman and chief executive of Kinder Morgan Canada Ltd., said the deal represents the best opportunity to complete the expansion project. Shares in the company gapped higher at the open and hit a high of $18 before falling back to $16.83 by mid-morning.

"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.

Kinder Morgan Canada's pipeline business earned $63.6 million before depreciation and amortization in the three months to the end of March, compared to earnings of $53.6 million for its terminal business.

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Federal Finance Minister Bill Morneau said Kinder Morgan will move forward with its original plan to twin the pipeline this summer while the sale is finalized, which likely won't happen until August.

The purchase will be financed by Export Development Canada and includes; the pipeline, pumping stations, the marine terminal in Burnaby, B.C. and rights of way along the pipeline between Edmonton and Vancouver.

Alberta Federation of Labour president Gil McGowan said he's impressed with the federal government for "taking decisive action".

The "agreement will help advance Canada as an energy leader, as a place where good projects get built", Natural Resources Minister Jim Carr said.

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This expansion will increase daily capacity from 300,000 to 890,000 barrels, while improving market access to the US Pacific Coast and Northeast Asia, according to the government, who also state that they don't intend to be the long-term owner of the project.

The Alberta government has agreed to cover any unexpected costs that arise during construction.

There has been intense opposition towards the project from environmental groups and some Indigenous communities in B.C.

The project faces fierce opposition from the government of British Columbia (BC) and environmentalists.

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