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When B.C. Premier Christy Clark announced her support for the Kinder Morgan pipeline expansion project, she cited an unprecedented revenue-sharing agreement with the company that will deliver up to $1-billion to the province's coffers.

But as the message printed on rear-view mirrors warns, some objects may appear larger than they are: The deal that the Premier announced is a non-binding agreement, and the details now under negotiation will determine the true value of those dollars.

"British Columbia will receive up to $1-billion over 20 years. That's $50-million a year. And every penny of that will go into environmental protection, including a new B.C. Clean Communities program," the Premier told reporters on Jan. 10 when she announced that the project has met her five conditions for heavy oil projects.

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The agreement states that Kinder Morgan's Trans Mountain pipeline subsidiary will make annual payments to the province for 20 years, once the pipeline is in production. The payments will be a minimum of $25-million each year. Depending on the amount of oil running through the pipeline in any given year, the annual payments could be as high as $50-million.

Those figures, as well as a B.C.-first jobs promise, are set out in a six-page term sheet – a commercial pact that has yet to be worked into a legal agreement. One key detail that is missing is whether the annual payments will be adjusted for inflation.

The term sheet is silent on the issue of inflation. If the language in the final agreement does not spell that out, the impact on the value of the deal can be significant. Split the difference and assume the average payment each year is $37.5-million, starting in the year 2020 when the pipeline is supposed to be in production. If inflation averages two per cent each year – and that is the best guess of economists, based on historic averages – a $37.5-million payment in the year 2040 would be worth less than $24-million in today's dollars.

Over the life of the deal, unless the Clark government negotiates an agreement to escalate payments according to inflation, then the cumulative value of the deal is going to be worth anywhere between $385-million and $770-million.

Premier Clark has said she would only agree to allow a heavy oil pipeline to be built across the province if it met her five conditions. The cash and jobs agreement with Kinder Morgan is designed to meet her fifth condition – a "fair share" of the economic benefits. The B.C.-first jobs promise is also vague. Kinder Morgan has not yet made its final investment decision, so it has not entered into contracts for construction of the new pipeline and expanded marine terminal.

The B.C. government has been told that Kinder Morgan has identified labourers in Burnaby, Surrey, Abbotsford and Langley to complete the marine terminal and tunnelling work in Burnaby. But until the construction contracts are signed, that is a plan, not a promise. The province still needs to negotiate language in those contracts to ensure that qualified British Columbians are the ones who get those jobs and those contracts.

The Premier says that without her five conditions, the federal government could have approved the pipeline without committing to a significant increase to the marine oil spill response capacity on the West Coast. That commitment will mean additional Coast Guard capacity, auxiliary equipment and training for coastal First Nations communities, and new tugboats positioned off the B.C. coast.

What she doesn't trumpet is the fact that her government had little legal authority to prevent Ottawa from approving the pipeline, as the project spans more than one province. Ms. Clark's strongest hand at the negotiating table with Kinder Morgan was her ability to help the company obtain a social licence.

The Premier's gamble will be to show voters that she won a good deal for B.C.

Ms. Clark does risk a voter backlash, especially with the seats her party holds in Metro Vancouver. But the Liberals likely have calculated the risk to be low: The opposition New Democrats, who were far behind the B.C. Greens in adopting an anti-pipeline stance, do not automatically pick up that support. And in order to win, the NDP need to pick up seats in ridings where "pipeline" isn't a dirty word.

The legal agreement is expected to be signed by mid-February. Whether Kinder Morgan hands over $1-billion or something considerably less, opponents of the pipeline will say the deal isn't worth it.

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