The federal government has reached an agreement with Kinder Morgan to purchase the company’s Trans Mountain Expansion Project (TMEP) and related pipeline and terminal assets for $4.5 billion. The transaction is expected to close in August 2018. Finance Minister Bill Morneau announced details of the agreement reached with Kinder Morgan at a news conference with Natural Resources Minister Jim Carr.
The Trans Mountain Expansion Project involves building a new pipeline along the existing Trans Mountain Pipeline running from Edmonton, Alberta to Burnaby, British Columbia, and expanding the capacity of the terminal in Burnaby.
The agreement will guarantee the resumption of work for the summer construction season, protecting thousands of jobs in Alberta and British Columbia. Federal loan guarantees will ensure that construction continues through the 2018 season, eliminating the uncertainty for families whose financial security relies on this project going ahead this year.
“The outcome we have reached represents the best opportunity to complete TMEP and thereby realize the great national economic benefits promised by that project,” said Kinder Morgan chairman and chief executive officer Steve Kean.
Moreau said the government does not intend to be a long-term owner of this project. At the appropriate time, Canada will work with investors to transfer the project and related assets to a new owner or owners, in a way that ensures the project’s construction and operation will proceed in a manner that protects the public interest.
This investment represents a fair price for Canadians and for shareholders of the company, and will allow the project to proceed under the ownership of a Crown corporation. The core assets required to build the Trans Mountain Expansion Project have significant commercial value, and this transaction represents a sound investment opportunity.
“This is an investment in Canada’s future,” said Morneau. “Our government believes that the commercial agreement we have reached with Kinder Morgan is the best way to protect thousands of good, well-paying jobs while delivering a solid return on investment for Canadians.”