Pipeline assets will attract buyers if feds can complete expansion, experts say

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Pipeline assets will attract buyers if feds can complete expansion, experts say

Steel pipe to be used in the oil pipeline construction of Kinder Morgan Canada's Trans Mountain Expansion Project sit on rail cars at a stockpile site in Kamloops, British Columbia, Canada May 29, 2018.

And at least one Liberal backbencher is echoing that sentiment.

The premier high-fived and hugged her caucus mates at a news conference where she announced that Alberta's months of lobbying, cajoling, arm-twisting, court fights, a wine ban and a legislated threat to cut oil shipments to British Columbia had resulted in the federal government taking over the pipeline and its expansion on the west coast.

The promise to honour social licence created expectations that clearly the Prime Minister had no intention of observing.

Construction on the 590,000-barrel-per-day expansion to the existing 300,000-bpd line, halted by Kinder Morgan in April, is to be restarted immediately in the wake of Tuesday's announcement of Ottawa's $4.5-billion purchase.

The Conservatives were not alone in their thinking.

In October, a disheartened Mayor Darling described the loss of Energy East as "a devastating blow" for Saint John. "That does not have anything to do with building the new pipeline and the estimates on that are anywhere from $7 [billion] to $14 billion, assuming it proceeds". However the questions raise a possible vulnerability for the Liberals in Atlantic Canada, a region where the party won all 32 seats in the last election. The goal is to have a new buyer in place for the vote, and to potentially turn a profit, they said.

"What I would say is that this decision today was exceptional".

That said, Ottawa made the only decision it could.

Conservative Leader Andrew Scheer vowed to make reviving Energy East a campaign issue and said he wouldn't put $4.5 billion on the table to get it done.

The Globe and Mail quoted B.C. Attorney General David Ebby as saying "The province is fully living up to its commitments under the agreement, and we expect that any future owner of the project would live up to theirs", noting that the original agreement between the province and Kinder Morgan included no condition that the provincial government can not change its mind about the Trans Mountain expansion.

Morneau presented the options during an early-morning cabinet meeting Tuesday before ministers signed off on the chosen option, which comes just days before the company's self-imposed May 31 deadline and is still subject to the approval of Kinder Morgan shareholders.

"The reason for the Kinder sale was that it wasn't able to get the pipeline built", said Joseph Doucet, dean of the Alberta School of Business at the University of Alberta. He said federal ownership will shield the project from B.C. political hijinks.

The only difference now is that pipeline critics will be demonstrating against a federal Crown corporation rather than a privately owned USA company.

Critics have suggested that the Prime Minister is buying his way out of a problem of his own making, while activists have promised this news will only increase protests and further fuel anti-pipeline sentiment. "The big experienced pipeline operators don't seem to be stepping up... and that seems to say a lot".

"I don't think anyone's going to buy [the pipeline] till it's actually done", Green said. "I'm saying I understand that people use non-violent civil disobedience".

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