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Pipeline purchase a failure; Schneider

Posted on June 7, 2018 by Vauxhall Advance

By Cole Parkinson
Vauxhall Advance

With the federal government’s decision to buy the Trans Mountain pipeline from Kinder Morgan, reactions have been widely varied.

While some have hailed it as a necessary step to get the pipeline addition built, there has also been plenty of critics who believed the purchase was too much.

The $4.5 billion purchase was made official on June 1 and the Alberta NDP government has put forward a maximum of $2 billion to go towards costs coming from unforeseen circumstances.

“Obviously, we continue to support the much needed Trans Mountain project but this is a catastrophic failure of both the Alberta NDP and the Trudeau Liberals, that caused Kinder-Morgan to pull out and forced the costly decision by government to buy this project,” said Little Bow MLA Dave Schneider.

Even with the announcement to buy the pipeline, Schneider doesn’t see those who opposed construction switching sides and being in favour of getting it built.

“The announcement changes nothing in terms of certainty for this project. Everyone that was opposed before the purchase is still opposed. We are clearly in this situation today as a result of actions taken by the Trudeau Liberal government with no opposition from Alberta’s NDP to halt the two other needed coastal pipelines, those being Enbridge’s Northern Gateway and Trans Canada’s Energy East,” added Schneider.

One of the messages the Liberals highlighted when they announced they were buying the expansion was they would be quickly trying to find a buyer to take over.

In fact, a report from the Vancouver Sun has said the government had begun sending out marketing materials just days after agreeing to buy the pipeline.

Schneider says any potential sale of the Canadian-owned portion will rely on a few significant components moving forward.

“I think that depends on a number of factors including, but not necessarily limited to the federal government taking meaningful action on immediately bringing forward their promised legislation to reinforce federal jurisdiction, pulling Bill C-69, which the energy industry says means any future pipeline project is very unlikely and the tanker ban (Bill C-48) that impedes the ability to get resources to market, invoke the declaratory authority under section 92.1c of the Constitution by immediately passing Bill S-245. That is the federal proposed legislation, an Act to declare the Trans Mountain Pipeline Project and related works to be for the general advantage of Canada and enforcing the law and constitution in matters related to this and other energy projects. Otherwise, investor confidence in Canada will be further shaken,” he said.

In the same report, it is said the Liberals have started engaging in talks with several different pipeline companies, pension funds and asset managers in hopes of negotiating a deal to offload the newly acquired asset.

A significant factor of any potential sale that has some concerned is the ability to get a good value out of the re-sale.

With the market hard to predict, there is no real way to know what the financials will be if a deal is struck between the government and a potential buyer.

“As for getting market value for the pipeline when it is sold… that is a hard one to call. The market will dictate value. I do know that the planned pipeline expansion will have significant costs beyond the $4.5 billion dollar initial purchase of the existing pipeline,” continued Schneider.

In regard to Alberta’s stake in the new addition to the pipeline, Alberta Premier Rachel Notley has stated she believes the pipeline will be a benefit for all of Alberta.

After a highly-visible battle with British Columbia’s premier, John Horgan, Notley and the NDP Alberta government have been vocal in their agreement with how the federal government took charge.

“When Kinder Morgan issued its deadline on April 8, the Government of Alberta committed that the deadline would be met. Today, we are delivering on that commitment. We are pleased to have worked with the federal government to ensure construction resumes, certainty is increased and Albertans and all Canadians enjoy the many benefits of having this project go forward. There is more work to do, but we will not stop until the job is done,” said Notley in a press released after the purchase was announced.

Moving forward, Schneider says the UCP will continue to hold the NDP government accountable especially in regard to financials. Costs affecting taxpayer dollars is a factor they will be keeping their eye on.

“While we are certainly prepared in principle to support the Alberta government’s commitment of up to $2 billion in funds to indemnify the Trans Mountain operator from delays caused by political or legal uncertainty…we will of course continue to press the provincial government for more details about the nature of this commitment, and demand full transparency on this and any other costs ultimately borne by taxpayers,” said Schneider.

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