The Canadian government has agreed to buy the Trans Mountain oil pipeline from owner Kinder Morgan in a deal worth around CAD $4.5-billion.
The move is an attempt by the government to make progress with a proposed expansion of the pipeline, which runs from the oil sands region of Alberta to a terminal near Vancouver on Canada’s west coast.
Under the proposal, capacity would increase from 300,000 to 890,000 barrels a day, but it has faced strong opposition from British Columbia, the province where the pipeline ends.
Finance Minister Bill Morneau said that buying the existing pipeline and its planned expansion project is the only way to ensure the halted project gets built, although the government does not intend to be long-term owners of the project.
“Our message today is simple: when we are faced with an exceptional situation that puts jobs at risk, that puts our international reputation on the line, our government is prepared to take action,” Morneau told reporters.
Justin Trudeau told Bloomberg that “there is a very strong business case for this pipeline,” and the government takeover meant “a lot of the legal barriers and a lot of the challenge points actually disappear”.