Premier Rachel Notley says she expects Alberta will end up with a stake in the Trans Mountain pipeline.
She believes the federal government — which announced in May it would purchase Kinder Morgan’s Canadian assets for $4.5 billion to ensure the planned expansion of the pipeline goes ahead — will retain ownership of the project until construction is completed.
The Kinder Morgan deal sees Alberta’s NDP government prepared to chip in up to $2 billion to cover costs that stem from “unforeseen circumstances” in the $7.4-billion expansion, with any provincial dollars translating into equity in the project once it is complete.
“I think there’s a good likelihood we will end up with an equity stake,” Notley told reporters at the premier’s Stampede breakfast at McDougall Centre.
Notley has said previously the NDP government would be in no hurry to unload any stake in the pipeline as it is expected to generate revenue.
“Whatever role Alberta takes is one that will absolutely be fiscally responsible and there’s a good, solid business case for it,” she added Monday. “If anything, it will open up opportunities for other Albertans.”
Federal Finance Minister Bill Morneau has said the Liberal government does not want to retain ownership of the project in the long run and intends to return the pipeline to private-sector hands as soon as possible.
But Notley said federal ownership makes sense right now.
“We know that it’s very likely the case … they’re going to end up holding on to it in some fashion until it’s done because they’re the best proponent to build it,” said the premier.
David Galison, director of research on pipelines, power and utilities at Canaccord Genuity, said Notley’s comments come as no surprise.
Galison said the change of ownership of Trans Mountain adds to the likelihood of cost overruns for Trans Mountain and the NDP achieving an equity stake. He said it makes sense for the province to invest given the project’s importance to the Alberta economy.
Trans Mountain and the NDP achieving an equity stake. He said it makes sense for the province to invest given the project’s importance to the Alberta economy.
The analyst also said there’s a strong chance the federal government will retain the Trans Mountain project through construction because potential private-sector investors will likely remain leery of the risks involved.
“It may be difficult for them to find someone to take on some of the similar risks that Kinder Morgan was looking to take on without some sort of financial guarantee,” said Galison.
Ottawa announced it would purchase the pipeline project after Kinder Morgan set a May 31 deadline to resolve uncertainty around the line to the British Columbia coast.
The project has been approved by the Trudeau cabinet and is seen as crucial to opening new markets in Asia for Alberta’s oilsands crude. But it has faced fierce opposition from some B.C. municipalities and First Nations, as well as that province’s NDP government.
Work is slated to begin next month on a 290-kilometre stretch between Edmonton and Jasper National Park.
Addressing her cabinet after the breakfast with reporters present, Notley said construction plans are on schedule.
She told ministers that pieces of pipe have already arrived at yards in the industrial area of Acheson, just outside the pipeline’s starting point in Edmonton, as well as in Edson, about 180 kilometres to the west.
The Acheson site is about a quarter full and the Edson site is half full, Notley said,
“We’re on track and the pipeline is on track,” she said.
With files from The Canadian Press