Federal officials were locked in negotiations with Kinder Morgan late Monday as Prime Minister Justin Trudeau prepared to meet with cabinet ahead of the company’s fast-approaching deadline to decide the fate of the Trans Mountain pipeline expansion.
Ottawa could make an announcement on the project as early as Tuesday morning, including a possible purchase, The Canadian Press reported.
But as of Monday evening, three outcomes related to the controversial Trans Mountain pipeline expansion were still possible: that the pipeline firm and the federal and Alberta governments will be able to come to an agreement about how the $7.4-billion project will proceed; that the parties will fail to come to any agreement; or that there will be an agreed-upon extension to talks, past the Thursday deadline set by Kinder Morgan.
“Discussions with Kinder Morgan are intense,” said a senior federal source, who asked to remain anonymous. “We are striving for some form of conclusion here before the deadline.”
However, The Canadian Press reported late Monday that Finance Minister Bill Morneau could make a pipeline announcement as early as Tuesday morning – after an early morning federal cabinet meeting – and options for a deal include Ottawa buying and building the expansion, then selling it once it’s complete or buying the project on an interim basis, then selling it to investors and leaving them to handle the construction.
Mr. Morneau has already unveiled a third option: leaving the project in Kinder Morgan’s hands, but providing an insurance or indemnity policy to cover cost overruns incurred as a result of political interference. When contacted by The Globe and Mail, Mr. Morneau’s office declined to answer questions about the Canadian Press report.
Kinder Morgan set off 50 days of uncertainty in April when it announced it was unlikely to move forward with the controversial expansion project from Alberta to the West Coast – opposed on environmental grounds by the British Columbia government – unless it saw clarity on its ability to build in B.C., and believed it could adequately protect its shareholders by May 31. Ottawa is facing pressure both not to give the American pipeline company a sweetheart deal, and to make sure the diluted-bitumen pipeline expansion to feed new global markets goes ahead.
Mr. Morneau is scheduled to speak at a Calgary Chamber event on Wednesday, but his office said it’s just a stop to speak about broader issues such as investor confidence and business competitiveness on the way to the Group of Seven Finance and Development Ministers and Central Bank Governors meeting in Whistler, B.C.
Discussions with Kinder Morgan are intense. We are striving for some form of conclusion here before the deadline.— Senior federal government source
But in Calgary, the site for Mr. Morneau’s speech had to be moved to a new venue to accommodate hundreds of the city’s business leaders who are looking for news from the Finance Minister this week.
Calgary Chamber of Commerce spokesman Scott Crockatt said on Monday the venue was moved from a hotel ballroom to a concert space on the Stampede grounds to accommodate about 500 for a sit-down lunch.
“There’s huge interest in this event and what Minister Morneau has to say,” Mr. Crockatt said. “The Calgary community is hoping he has positive news.”
Ottawa has said it is willing to give some public backing to see the controversial project built – it is is just a question of what form the support will take, and how much it will cost.
Two weeks ago, Mr. Morneau said Ottawa was willing to indemnify the Trans Mountain expansion against unnecessary delays that are politically motivated by the B.C. government. He later added the guarantee against financial loss for Kinder Morgan would likely come at no cost to Canadian taxpayers, as Ottawa would in return earn a premium from the project backers for extending this insurance.
In the past, federal officials have said a key concern is whether the company is serious about striking a deal, or whether it simply wants to exit the project. Mr. Morneau has said others, including pension plans, might be interested in investing in the project if Kinder Morgan loses interest. But so far, the government of Alberta is the party that has expressed the most definitive interest in acquiring some kind of stake in the project.
In Victoria, B.C. Attorney-General David Eby said uncertainty will continue to hang over the project because of the outstanding legal challenges. The federal Court of Appeal is considering 15 consolidated challenges to the federal approvals of the pipeline project, and could render a decision any day – or it could accept an application to reopen the case to hear new evidence.
The applicants aim to overturn the National Energy Board and federal cabinet decisions that granted approval for the project.
“This is in my opinion the most significant legal challenge that particular project faces,” Mr. Eby told reporters on Monday. “Regardless of whatever announcement happens this week from the federal government, the court process will continue.”
With Ottawa’s response pending, critics of the expansion project increased their attacks. The City of Vancouver revealed it has been unable to fully recover its costs from a federal fund from the cleanup of a bunker fuel spill from the MV Marathassa in English Bay three years ago – underscoring the lack of accountability for spill response and for compensation.
Vancouver Mayor Gregor Robertson, in a statement, said city’s experience with that small spill is part of what is driving opposition to the Kinder Morgan pipeline project. The B.C. government says it too has been unable to collect from the ship’s owners for its costs associated with the cleanup.