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Pipeline acquisition will help build a nation; Minister Phillips

Posted on June 7, 2018 by Vauxhall Advance

By Greg Price
Vauxhall Advance

In a decision swirling in controversy across various political lines, the provincial NDP party sees a victory in the purchase of Kinder Morgan’s Trans Mountain pipeline, as well as the expansion project last week by the Trudeau Liberal government.

“Construction is going to resume as quickly as possible. That was one of our conditions in participating in these talks with the federal government,” said Shannon Phillips, Minister of Environment and Parks for Alberta.

The federal government announced last week it will spend $4.5 billion to buy the Trans Mountain pipeline and related infrastructure, and will also take on construction of the pipeline to the West Coast. The expansion, which twins an existing pipe, is estimated to cost an additional $7.4 billion. Alberta Premier Rachel Notley announced Alberta would invest up to $2 billion to get the project built.

“What we are hearing from across the province is that this is part of building a recovery that will last in this province. People are looking forward to the good jobs from the energy sector and the good jobs that come out of diversification as well,” said Phillips. “It’s been a big week. The fact of the matter is, this project is going to get built and this project is in the national interest because of all the contributions of the Alberta energy sector and the good-paying energy jobs make to the rest of the country.”

The original 1,150-km Trans Mountain Pipeline was built in 1953. It was expanded in 1957, then again between 2006 and 2008. The $7.4-billion twinning would run pipe over 980 kilometres.

This expansion adds 12 new pump stations, along with 19 new tanks to an existing storage terminal in Burnaby, one tank in Sumas and four tanks in Edmonton. It will boost capacity from 300,000 to 890,000 barrels per day. When the project is complete, it will be 2,130 kilometres of pipeline carrying diluted bitumen from Strathcona County, just outside of Edmonton, to Burnaby, B.C.

The purchase decision comes after blockades of private expansion, from the B.C. NDP government going to court, and some indigenous and environmental group protests.

The uncertainty prompted Kinder Morgan to halt investment until the federal government could inject some certainty into the project, giving a May 31 deadline.

“With the feds in place now, they have a form of Crown immunity that really takes all the air out of the balloon in terms of B.C.’s court challenges. There’s only really one remaining that is big. And we have a perfect record of 18 out of 18 court cases that we have won so far. You never know what courts are going to do, but we are cautiously optimistic on that last one,” said Phillips. “As far as the Indigenous pieces, there’s no question that at some point not everyone is going to agree. Having said that, there are 43 First Nations along the route who have mutual-benefit agreements with the company that will remain in place with federal ownership or whoever the next owner is. There might still be more to come with how they structure the federal ownership of this pipeline.”

Phillips pointed the finger at Conservatives who have been pumping the tires of opponents.

“They are screaming from the rooftops because they want this pipeline to fail. They do not want to see Premier Notley succeed and I just think that is beyond comprehension. It takes a run at working people for their own narrow political interests, and I for one am calling it out every time I see it,” said Phillips. “I won’t have it because it has a real negative affect on people in my riding and throughout the province.”

Phillips stressed the up to $2 billion investment the province has earmarked in the project is after the oil is flowing, if there are any emergency expenses that happen.

“We are not going to do it in a cheque-writing sort of way. Up to $2 billion will be guaranteed from Alberta for any emergency expenses or cost overruns, which we will make public. Our investment would be converted to equity,” said Phillips. “Albertans would not be just writing a cheque. We would own a piece of the infrastructure that we know is going to be profitable, that is why it is in the national interest.”

Given the staunch opposition to the Trans Mountain pipeline expansion by B.C. Premier John Horgan, Phillips is baffled at how the province still expects Ottawa to pay the province up to $1-billion if the Trans Mountain pipeline expansion goes ahead.

Kinder Morgan’s Trans Mountain subsidiary inked a profit-sharing pact with the B.C. government on April 6, 2017, after then-premier Christy Clark agreed to support the expansion project. In exchange, Ms. Clark’s government publicly confirmed that the project met its conditions for approval and committed to timely processing of permits throughout construction.

The revenue-sharing deal would oblige Trans Mountain to pay British Columbia a minimum of $25-million a year over 20 years once the project is in operation. If shipments exceed contract volumes, the payments could rise to a maximum of $50-million annually.

The BC Liberals lost power after the provincial election, and the NDP, which campaigned on a promise to use every legal tool available to stop the project, formed a minority government under John Horgan.

“There is a little bit of having your cake and eating it too happening here. There is plenty of hypocrisy to go around in the anti-pipeline circles. We have said there are plenty of things we can work on with the B.C. government, including efficiencies, clean tech and renewables. You name it,” said Phillips. “But only if they stop trying to choke the Alberta economy. Rachel Notley knows exactly who she works for which is the people of Alberta and she knows what her priority is which is getting people back to work. But not just in the traditional oil and gas sector, but to diversify our economy. The environment and the economy can go together. It’s not either or. And this is part of that overall process.”

Canada loses $15 billion every year on the sale of oil because the U.S. remains its only export customer, resulting in a lower price, Premier Trudeau argues, in the need for the Trans Mountain pipeline expansion to get product to tidewater and other export customers in Asia.

Long-term goals are to entice the private sector to take over the project, but for now, forward progress for the project needed to be guaranteed with Kinder Morgan’s imposed May 31 deadline from last week looming.

“Nationalized often implies that you have one unwilling partner and that is not the case in this case. The federal government has indicated that what they are going to do is give this project the certainty it needs to get through some of these hurdles and get on with the business of building this pipeline.”

Phillips added having government intervention/presence in energy matters is nothing new in the nation’s history.

“There are plenty of examples through Canadian history, and particularly Alberta history of these projects having a public ownership component in order to get done. We got the oil out of the sand in the first place through Lougheed’s public investment in Syncrude and Suncor,” said Phillips. “We built the Alberta Gas Trunk Line that affects the petrochemical sector, with public ownership. Saskatchewan still has a number of publicly-owned gas lines. There are plenty of examples where the public sector pitches in with some sort of Crown agency, uses its clout to get something that matters done. That is how we have electricity for heaven’s sake. The province built our electricity tie-lines in the first instance…that’s how we got a railroad.”

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