Canada could purchase Kinder Morgan’s Trans Mountain Pipeline project

According to Bloomberg, citing people familiar with the matter, the Canadian government could soon buy Kinder Morgan’s Trans Mountain Pipeline project to ensure its completion.

The news comes as the project has been pegged back by numerous regulatory delays that could see construction stretch beyond the latter half of 2020, costing Kinder Morgan vast sums of money that has resulted in the firm threatening to abandon the project.

See also:

• Trudeau ready to offer financial backing to Trans Mountain Pipeline

• Kinder Morgan to sell shares to fund Trans Mountain pipeline project

• Six contractors named for Kinder Morgan’s Trans Mountain pipeline expansion

Late last year, the company sold 8mn shares at $25 per share, totaling $200mn, in the aim of funding the project’s continued construction.

However, as a result of these financial pressures, last month Kinder Morgan scrapped all non-essential work on the pipeline, stating that it would ditch the project unless these challenges were resolved by 31 May.

According to the Canadian Press, the government’s options include buying the project before selling it on after it is successfully completed, or purchasing the pipeline on an interim basis, then selling it off to investors who could complete the project.

Alternatively, Ottawa could opt to cover any cost overruns incurred by the political and regulatory delays to ensure that Kinder Morgan can complete the project.

If the project does eventually complete, the pipeline expansion will almost double Canada’s production capacity in the pacific oil markets from 300,000 barrels per day (bpd) to 590,000bpd.