Canadian government will buy Kinder Morgan's 300,000 b/d Trans Mountain crude pipeline system
The deal clears the way for work on the project to restart with Ottawa footing the bill. Kinder Morgan halted activity on the pipeline expansion last month as it set a 31 May deadline for an assurance it could build the line across British Columbia (BC), which has fought the project vigorously.
"The outcome we have reached represents the best opportunity to complete [the expansion] and thereby realize the great national economic benefits promised by that project," Kinder Morgan chief executive Steve Kean said.
The company and the government will work together to find another buyer for the project through 22 July.
Canadian prime minister Justin Trudeau said the action will "create and protect jobs in Alberta," where most of the crude ticketed for the pipeline system is produced.
BC premier John Horgan, who has strongly opposed the expansion, said that the province will continue to pursue legal action to stop it. The risk of a bitumen spill with possible "catastrophic consequences" for the coast is the same regardless of who owns the pipeline, he said at a press conference in Victoria, BC.
One key court case involves a constitutional question as to whether BC has the jurisdiction to regulate the flow of oil through its territory.
Horgan also said passionate citizens should engage in peaceful protests against the expansion.
"I encourage them to express their disappointment within the rule of law," he said.
Alberta Premier Rachel Notley, who fought vigorously to get the expansion built, said the agreement was "a major step forward for all Canadians" and that "this project has more certainty than ever before," according to her Twitter account.
Kinder Morgan expects the sale to close late in the third quarter or early in the fourth quarter, Kean said on a conference call.
Western Canadian crude has been trading at stiff discounts to other north American benchmarks for months amid record high inventories and a lack of sufficient takeaway capacity. Notley cited the low prices as one of the reasons to support the Trans Mountain expansion.
Western Canadian Select (WCS) for June injection traded yesterday at a $20.90/bl discount to the calendar month average (CMA), according to Argus data. This was about $5/bl lower than where the heavy sour benchmark traded during the trade window. For July injection, WCS was assessed at a $17.50/bl discount.
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