Trudeau’s pipeline takeover is bittersweet win for oil sands

Bloomberg

Canada’s purchase of Kinder Morgan Inc.’s embattled pipeline is good news for the oil patch, so long as it doesn’t become the norm.
While the $3.5 billion Trans Mountain takeover keeps alive a project seen as critical to expanding markets for Canada’s crude and improving the price oil-sands producers get paid, it also reveals how key infrastructure projects can be stymied by local opposition and regulatory hurdles.
“We would desperately hope this is not the model of how future projects get done,” Chris Bloomer, president and chief executive officer of the Canadian Energy Pipeline Association, said in a phone interview, adding that he is nonetheless pleased that the project can now go ahead.
Long after getting federal approval to almost triple the capacity of its six-decade old conduit in 2016, Kinder became the latest pipeline operator to come against fierce local opposition in Canada. The much more ambitious Energy East project was abandoned by TransCanada Corp. amid outcry in Quebec — and no government move to save it.
“We think that today’s announcement is based on extraordinary circumstances,” Tim McMillan, chief executive officer of the Canadian Association of Petroleum Producers, said in a press conference. “We don’t want to find ourselves in this situation again.”
The fact that Trans Mountain needed tax payers to purchase the project has exposed “fundamental flaws” in Canada’s regulatory system, the Business Council of British Columbia said in a release.
“It shows that Canada is not very business friendly because the only way this could be done is that the federal government has to step in and buy it,’’ Laura Lau, who helps manage C$1.5 billion in assets at Brompton Corp. in Toronto, said by phone.
Alberta’s oil sands, the world’s third-largest crude reserves, are a crucial part of Canada’s economy. The existing Trans Mountain line has been operating since the 1950s, carrying as much as 300,000 barrels a day of oil and refined fuels from Alberta to the Vancouver area, where it connects with a line carrying crude to refineries in Washington state.