Justin Trudeau’s government is prepared to take the extraordinary step of reimbursing
Kinder Morgan Canada Ltd. for any financial losses if it proceeds with the expansion of an oil pipeline to the Pacific.
Finance Minister Bill Morneau said Wednesday he’s prepared to “indemnify” the C$7.4 billion ($5.6 billion) Trans Mountain project against political delays as it faces opposition from British Columbia’s provincial government. The minister added that Canada is prepared to backstop any other company willing to take on the project if Kinder drops out.
“If Kinder Morgan is not interested in building the project, we think plenty of investors would be interested in taking on this project, especially knowing that the federal government believes it is in the best interest of Canadians and is willing to provide indemnity to make sure it gets built,” Morneau said at a hastily arranged press conference in Ottawa.
Kinder’s Canadian unit holds its annual general meeting in Calgary later Wednesday. Its shares surged Wednesday, up 3.2 percent to C$17.28 at 9:43 a.m. in Toronto. They had been down 1.5 percent this year, trailing the 3.6 percent gain in the S&P/TSX Energy Index.
The federal government is racing against a May 31 deadline the company imposed for Canada to resolve the legal uncertainty around the project. Morneau said discussions with Kinder are ongoing and that he still thinks the project is commercially viable without government support.
Asked whether the government could take an equity stake in the project, Morneau said he hasn’t come to any conclusions as he considers the federal government’s options.
The project would expand an existing pipeline from Alberta’s oil sands to the Vancouver area, where crude would be loaded onto tankers. The federal government has claimed jurisdiction over the inter-provincial project, which it has already been approved, and has said it will consider legal and financial options to see it built.
“I’m very very confident this pipeline will get built,” Prime Minister Justin Trudeau repeated at a news conference in Calgary Tuesday.
— With assistance by Josh Wingrove