Canadian Government Buys Trans Mountain Expansion Project

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Canadian Government Buys Trans Mountain Expansion Project

Thu, 05/31/2018 - 09:37
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Canadian Government Buys Trans Mountain Expansion Project (BILD LLC / Shutterstock)
Canadian Government Buys Trans Mountain Expansion Project (BILD LLC / Shutterstock)

Canada's government is intervening in the conflict over the construction of Kinder Morgan's Trans Mountain Expansion Project with an unusual decision. To ensure the construction of the controversial pipeline, it is purchasing the whole project and the infrastructure needed to expand the pipeline from Kinder Morgan for 4.5 billion Canadian dollars (about 3 billion euros).

Kinder Morgan had threatened to cancel the $7.4 billion investment after massive resistance from the provincial government of British Colombia and several environmentalist groups. The Trans Mountain Expansion Project is designed to significantly increase the capacity of an existing pipeline transporting bitumen oil from Alberta's oil sands fields to the Pacific coast near Vancouver through a parallel pipeline. However, this is highly controversial in the province of British Columbia.

The expanded pipeline will give Alberta, which lies inland, improved access to the ocean and markets in Asia leading to higher tax revenues for both, the province of Alberta and the Federal Government. The capacity of the pipeline system would increase from now 300,000 barrels per day to almost 900,000. The government of British Columbia (BC), has fiercely resisted this because it considers the risks to the environment to be too high. The project is also controversial among the population.

Primeminister Justin Trudeau approved the project already in 2016 but since then the project has been delayed several times. Kinder Morgan has set a deadline for the Federal Government to clarify the realization of the project, otherwise the company would withdraw. However, Canada wants to own the pipeline only temporarily. It is to be sold as soon as possible to indigenous communities along the route that had already signed agreements with Kinder Morgan to share in the profits. Also, other investors have signed agreements to buy in.

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