Kinder Morgan Canada shares move higher after deal to sell Trans Mountain

Vaughn Palmer

Vaughn Palmer

The Trans Mountain project has more certainty than ever, said Premier Rachel Notley, who lauded the federal government's announcement that it will buy the pipeline and all of Kinder Morgan's core Canadian assets for $4.5 billion.

The plan announced Tuesday has several stages - construction will continue this year with a Federal loan guarantee as the deal is finalized; the government will look for a new owner or owners to transfer the project to; and then "indemnify" the owner against certain costs.

Buying the pipeline outright has become increasingly likely and is now the most probable option for the Canadian government, the person said, speaking on condition of anonymity because the discussions are private.

"So our message today is simple: when we are faced with an exceptional situation that puts jobs at risk, that puts our global reputation on the line, our government is prepared to take action", Morneau told reporters.

The pipeline would give Canadian crude greater access to foreign markets, but is opposed by environmental groups and some aboriginal groups. Kinder Morgan Canada and the federal government will spend the next eight weeks jointly trying to find another buyer for the pipeline. "They are getting a very good value", said Paul Bloom at Bloom Investments Counsel Inc, which owns about 300,000 shares in Kinder Morgan Canada.

She said the deal announced before markets opened Tuesday would also provide a boost to the Canadian energy industry - both for producing companies and the outlook for domestic crude oil prices.

Morneau sidestepped questions about how Ottawa will deal with opposition from environmentalists and aboriginal groups, who cite the risk of a catastrophic spill. Trudeau pledges regularly, including on Monday, that the pipeline will be built.

Kinder Morgan Canada's shares jumped as much 8.5 percent in Toronto. "We will not stop until the job is done", Notley said.

Kean did not say why he made a decision to sell rather than absorb the risk of further delays. "I think that's been reinforced by the fact that Kinder Morgan was able to build up through different open seasons to a high level of commitment (from shippers)", he said.

Jaw-dropping scenes from the Ellicott City flood
According to officials, no one has been reported missing in Baltimore County and no serious injuries have been reported. Some are already asking questions about whether enough was done after the last flood to prevent a similar catastrophe.

Horgan said federal ownership of the pipeline won't alter his government's actions, because the reference case to try and regulate the import of oil into the province is not specific to any pipeline.

But Morneau said the Alberta-British Columbia feud - which led Alberta to boycott British Columbia wines and threaten to cut the neighboring provinces fuel supplies - "cannot be allowed to fester".

"And, it will reassure investors that Canada is a country that respects the rule of law and gets big, important things done", he added.

Trans Mountain stirred an unusual public fight between neighboring provinces.

She added Alberta is willing to invest up to $2 billion in indemnity that will be converted to equity if necessary.

A Canadian Crown corporation will be set up to own the pipeline and manage the TMEP, which is now forecast to cost C$7.4 billion ($5.9 billion) to triple capacity to 890,000 b/d.

Premier John Horgan told media Tuesday that Ottawa's decision doesn't change a thing about the concerns of his government, and he's still anxious about a catastrophic spill.

Horgan said he's anxious about the "catastrophic consequences" should there be a spill, regardless of the owner, and will continue to fight it in court.

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