TMX Dollars and Sense

TMX

© Kinder Morgan Canada Limited

There are many sides to the story of the Trans Mountain Expansion project (TMX) and our federal government’s offer to purchase the existing Trans Mountain pipeline — and related assets.

There is the need for Alberta, especially in these times of uncertainty around capricious US tariffs, to be able to export their resources to non-US markets;  there are hundreds of thousands of Canadians, both in Alberta and elsewhere, who depend on the oil patch to pay their rent and feed their families.  And the fact remains that our economy still runs on fossil fuels.

Climate Change

There is also real concern over climate change and meeting our Paris commitments, to which it should be emphasized that as part and parcel of approving TMX, Alberta committed to our Pan-Canadian Framework on Climate Change, which includes:

They also, significantly, agreed to cap oil sands GHG emissions at 100 megatonnes/year CO2-equivalent.

Indigenous Consent

There are concerns, as well, about indigenous consent, and indigenous communities themselves are not of one mind on this;  some are on board, some are not, and there are important questions that need to have their day in court.

Coastal Waters

Then there is grave concern about protecting our BC coastal waters, and a lot of work has been done herewe know how dilbit behaves in waterwe know how to clean it up;  and we know that in over 60 years of operation there has not been a single cargo spill from Trans Mountain tankers.  This is an exemplary safety record that we are further shoring up by doubling clean-up capability, creating additional bases for faster response, and requiring double-hulled tankers and double tethered-tug escorts, for example.

Transitioning to a New Economy

All of this was factored into the TMX decision as well as the offer to purchase.

Heavy Traffic

© /Shutterstock

Alberta is, even now, as are we all, moving from a fossil-fuel economy into a sustainable 21st century green economy.  But it takes time, and if you look at the millions of fossil-fuel vehicles:  cars, trucks, buses, heavy equipment, trains, ships, and planes daily traversing our land, sea, and sky, and imagine simply stopping them all tomorrow, cold-turkey, you will understand that as we develop this new economy we must for a while still feed these dinosaurs of the old century.

TMX Business Risk

Tripartite TMX

PM and Premiers Meeting on TMX, April 14, 2018

Kinder Morgan Canada Limited (KML) was originally willing to put up their $7.4 billion to build TMX — against the normal risks of a large construction project — until the BC government chose to challenge federal jurisdiction here.  This introduced a huge new and untenable project risk.  As KML Chairman and CEO Steve Kean noted:  “a company cannot litigate its way to an in-service pipeline amidst jurisdictional differences between governments.”

While we offered to protect them against this unusual risk, with the construction season hard upon us we also offered to buy them out, subject to immediate resumption of construction.  We do not want to be in the pipeline business, but it is key to retaining support in our overall climate strategy that this project proceeds, and succeeds.

Purchase Valuation

TransMountain

The Trans Mountain pipeline has been well maintained and well operated throughout its 60-plus years.  It is a profitable going concern with more business than it can handle, which will prevail well into the future even as we work to phase-out fossil fuels.  These assets, upgraded over the years, have decades of remaining useful life, and, including engineering and development pertaining to the expansion, have been carefully evaluated by experts as a good buy at the negotiated price.

This is not an “expense,” where money is spent never to be seen again.  It is an investment in productive assets that will return value to Canada in many ways for many years, and which we will recover in full measure when we divest, probably after the jurisdictional dispute is resolved.

It is also not “instead” of things like investments in housing or indigenous water systems and the like, but “in addition” to these and to our many other on-going commitments in so many areas.

Finding Balance

I recognize that not everyone agrees with this decision, but we remain committed to working with the provinces, territories, and indigenous peoples to find a balance that ensures a strong economy while taking leadership on the environment.

Facebooktwittergoogle_plusredditpinterestlinkedinmail
Posted in Climate Change, TMX | Comments Off on TMX Dollars and Sense