Kinder Morgan (NYSE:KMI) "won a billion dollar bailout" from the Canadian government after structuring deals in such a way that it had little to lose, even if the Trans Mountain expansion project stalled, according to a Reuters analysis.
Yikes. These are the same people who have just agreed to spend $4.5 billion to buy Kinder Morgan's Trans Mountain project - the existing pipeline, the terminal assets, the current management team and workforce and the right to build an expansion that will triple daily capacity to 890,000 barrels.
"Every time that the government has taken over these projects, we've found that they have lost money; they always have been subsidized by taxpayers and those subsidies continue until such time as the federal government gets out of the business".
Opponents of the Kinder Morgan project are concerned over the environmental impact of extracting more fossil fuels from Alberta's oil sands and the possibility of an oil tanker spill in Canada's Pacific waters.
Amid the feuding, the pipeline has become a barometer for foreign investments in Canada, with some warning of a spillover into other sectors of the economy. To do so, Canada will pay the pipeline's current owner, Kinder Morgan, $4.5 billion in Canadian dollars - about $3.5 billion in USA currency.
He added: "It will reassure investors that Canada is a country that respects the rule of law and gets big, important things done".
The Houston-based company had stopped all non-essential spending on the project last month after facing broad opposition from environmental groups, indigenous communities, and the province of British Columbia.
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Part of the problem is that the rules are so complicated that companies may find it hard to know for sure if they comply. Some are obvious, such as to fulfill contractual obligations - for instance, when an insurer pays out a claim.
"With Trudeau's announcement today, he's forcing Canada, forcing Canadian taxpayers, to pay for his failure in the energy sector".
Green Party MP Elizabeth May, representing Saanich-Gulf Islands, and Victoria NDP MP Murray Rankin both panned the federal move. The move ended weeks of speculation sparked by Kinder Morgan's threat to abandon a project facing "unquantifiable risk" as the British Columbia government vowed to use every tool to block it. It is deeply unpopular with the province's environmentalists and many indigenous groups, and Mr Horgan has been fighting to delay its construction over regulatory concerns.
Vancouver Mayor Gregor Robertson called the pipeline an "unacceptable risk" that threatens 10,000 jobs in the harbour.
Canada's long-term plan is to finance the costs of construction through the paid contracts with oil producers to ship their oil through the pipeline, and recoup its investment through an eventual sale.
While Wilson admitted he doesn't know how accurate the cost estimates for the project are, he believes Canada ultimately will make money off it. Instead, he said Trudeau did nothing to fast-track any constitutional references and never introduced legislation to "entrench and enshrine federal jurisdiction".
The pipeline's expansion faced a tenuous future as lawsuits mounted from British Columbia and indigenous people. A new Crown corporation will be created to manage the project.
"That's six and a half decades that we're talking about and of course it's quite exceptional that there are two provinces that see the issue quite differently".