Government of Canada could buy Trans Mountain pipeline project

Canada is likely to buy Kinder Morgan Canada Ltd’s Trans Mountain oil pipeline and its proposed expansion project in an attempt to ensure that it is built, Bloomberg reported on Monday, citing a person familiar with the talks.

The company, a unit of Houston-based Kinder Morgan Inc, had stopped all non-essential work on the C$7.4 billion ($5.70 billion) project in April, citing permitting delays and political opposition in British Columbia, and said it would scrap the expansion unless the legal challenges are resolved by May 31.

Expansion of the Trans Mountain pipeline, which takes crude from Alberta’s oil sands to a facility in the Pacific province of British Columbia, has also faced opposition from environmental groups and some aboriginal groups.

The minority left-leaning New Democratic government in British Columbia, citing the risks of a major spill, opposes the project. This year it proposed new rules to temporarily block increased shipments of crude while it examined oil spill preparedness and response.

Canada’s finance minister, Bill Morneau, is expected to announce on Tuesday whether or not the government plans to support the expansion of the pipeline expansion, the Canadian Press reported earlier on Monday. Bloomberg reported that the deal could be announced as early as Tuesday.

“We’re not commenting on speculation,” a spokesman for Morneau told Reuters, while Kinder Morgan Canada was not available for comment outside regular business hours.

Options for the pipeline expansion include the government buying the project and selling it after completion or buying it on an interim basis and selling it to investors for further construction, the Canadian Press reported.

Morneau had unveiled a third option, which is to leave construction to Kinder Morgan Canada, but cover any cost overruns incurred as a result of political interference, the Canadian Press reported.