Ottawa poised to approve Trans Mountain expansion

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Canada’s Liberal Government is poised to approve a controversial plan to expand the Trans Mountain pipeline this week, people familiar with the process told Reuters news service on Monday.

With an announcement expected to come as early as Tuesday, Trans Mountain was already a hot topic of debate Monday with former federal environment minister David Anderson telling CBC there may be no business case for the expanded pipeline.

“There is no credible evidence to suggest that Asia is likely to be a reliable or a significant market for Alberta bitumen,” Anderson wrote in a letter dated June 11, 2019.

However, that view was disputed by University of Calgary Economist Trevor Tombe, who told CBC that producers in Alberta are confident there will be demand to ship through an expanded pipeline system.

Meanwhile, a decision on the pipeline is something that the Trudeau government “needs to get done” with a Federal election looming in October, 2019, a leading Canadian pollster said recently.

That, combined with the fact that the Canadian government became an owner of the Trans Mountain pipeline in May, 2018, following a $4.5 billion purchase agreement with former owner Kinder Morgan Canada [KML-TSX], means the project will in all likelihood be approved this week, sources told Reuters.

Shareholders of Kinder Morgan Canada voted overwhelmingly to approve the sale on the same day that the Federal Court of Appeal quashed the approval of the $7.4 billion Trans Mountain Pipeline expansion on the basis that Canada’s efforts to meaningfully consult with indigenous people fell short.

When the ruling was announced, the court also criticized the lack of attention given to how increased tanker traffic off the cost of British Columbia would affect the resident killer whale population.

On Monday a number of political commentators said it remains to be seen what other road blocks will emerge after the project gets a green light from Ottawa.

British Columbia Premier John Horgan has promised to “use every tool in the tool box” in a bid to prevent the project from going ahead. The pledge is a reflection of his concern about a potentially catastrophic oil spill. Alberta has reacted by launching an ad campaign which warns of the consequences of another pipeline delay. Another delay means another hospital doesn’t get built, one ad read.

The original Trans Mountain Pipeline was built in 1953 and continues to operate today. The proposed expansion is essentially a twinning of the existing 1,150-kilometre pipeline between Edmonton, Alberta and Burnaby, British Columbia.

Expected to cost approximately $7.4 billion, it will create a pipeline system with a nominal capacity rising from 300,000 barrels per day to 890,000 barrels per day.

After purchasing the pipeline from Kinder Morgan, the Canadian government elected not to challenge a court decision that put the brakes on the expansion.

Instead, Ottawa said it would resume consultations with Indigenous groups that will be affected by the project.

Canadian Natural Resources Minister Amarjeet Sohi said Ottawa was going to work with First Nations and Metis communities to seek their views on how to get Phase 111 [of the process] right.

Prime Minister Justin Trudeau is facing huge pressure from Alberta and its Premier Jason Kenney to get the Trans Mountain pipeline approved and built, so that Alberta’s resource sector can move more of its oil offshore to markets in Asia.

Alberta-based senator Doug Black introduced Bill S-245 the Trans Mountain Pipeline Project Act in the Senate last year. His aim was to declare that the pipeline expansion project is in the national interest and should proceed for that reason.

Not having access to energy markets is costing Canada billions of dollars and the expansion of the Trans Mountain pipeline system between Edmonton, and Burnaby, B.C.,  is a critical solution to this problem, Black said.

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