Recently, the Governments of Canada and Alberta announced a deal to make sure the Trans Mountain pipeline expansion gets built. Here are answers to some of the most commonly asked questions we’ve received since then.





WHAT HAPPENED?



On April 8th, Kinder Morgan announced they would be ceasing work on the Trans Mountain project unless there was a stop the political challenges and legal harassment by the BC government and a clear path to construction and operation. In response Alberta Government announced it would take whatever steps ended up being necessary to see the project to completion – up to and including purchasing the project outright.



That, however, was stated to be a final resort.



Albertans and their government began a campaign to pressure the federal government to assert its jurisdiction (“a federal approval must be worth more than the paper it is written on”) and solve these challenges themselves.



To broker a deal, Alberta offered to be part of a federal solution, provided three conditions were met:





Construction of the pipeline expansion needed to resume immediately.



There needed to be certainty that the project would move forward.



Albertans needed to see value for any investment.



The federal government met those conditions and purchased the Trans Mountain pipeline and surrounding assets. Construction recommences now.





HOW IS A FEDERALLY OWNED PIPELINE MORE LIKELY TO BE CONSTRUCTED THAN ONE OWNED BY KINDER MORGAN?



There are two major differences.



First, the federal government has a very different legal relationship with the province of British Columbia than a private company does. The same legal tools BC might use to frustrate a private company don’t work on the federal government. As another order of government that enjoys special immunities, the federal government is not subject to the provincial laws that the BC government had threatened to use to delay the project.



And second, for the federal and Alberta governments, the economics are different. Kinder Morgan had to address shareholder concerns about whether this project would be the best return for their investment. The federal government is able to get a return for this project in four ways:

the profit generated by the pipeline;

the government revenue this project provides (estimated at $46.7 billion over the next twenty years);

the economic activity this project generates from coast to coast to coast; and

the benefit to Canada’s investment climate of proving that federal approval of a project means the project will be built.

Because the federal and Alberta governments have this larger stake in the project than Kinder Morgan, they will not be intimidated. And because the federal and Alberta governments are simply larger than Kinder Morgan, the up-front cost of the pipeline represents only a small fraction of government spending and only a small fraction of what the federal government has spent on other such economic stimulus initiatives like the auto bail-out.





WHAT DID ALBERTA CONTRIBUTE TO THIS DEAL?



In addition to convening, applying pressure on all parties and championing this deal, Alberta will contribute up to $2 billion to backstop any risk. Alberta’s investment would be payable only once the project is complete and oil begins to flow. At that point, Alberta’s investment would be converted to equity, maximizing the return for Albertans.



Put another way, Alberta is willing to buy up to $2 billion of a company – but that money is only payable once the company is guaranteed a profit.



While this could be considered a good deal for any investor, the payoff for Alberta is more than a return on a pipeline investment. This deal provides the foundations upon which private investment can flourish. It will attract investment to Alberta, create good jobs, and fetch higher and fairer prices for Alberta’s energy resources.





ISN’T THIS UNPRECEDENTED?



Governments in Alberta and Canada have a history of stepping in and helping to carry major, nation-building projects across the finish line.



For instance, in the 1970s, Alberta could only access the oil sands through open pits. Using steam was unheard of. Premier Peter Lougheed started a Crown corporation called the Alberta Oil Sands Technology and Research Authority. It invented the technology that’s now commonplace in the oil sands: SAGD, which lets us access the oil underground using steam and gravity, leaving the surface undisturbed.



Another example of government participation in the development of our energy sector is Syncrude, which has raised billions in taxes and royalties. It would never have got off the ground without the public investing in it. On the east coast, the same is true for Hibernia. Deep sea oil drilling needed federal investment to get underway. It turns a profit every year.



Today, it’s commonplace for the private sector to invest in the oil sands, or deep sea drilling. What’s now less commonplace is building pipelines to the coast. It’s been almost 70 years since a new pipeline was built to the coast. So, just as the public sector got steam oil exploration and deep sea oil exploration going, the Governments of Canada and Alberta are taking action to get this pipeline going.



The Trans Mountain pipeline will keep Albertans and Canadians working. It will support tens of thousands of jobs, provide billions of dollars in benefits to our cities and towns, and it will show the world that when Canada makes a decision, Canada stands behind it.



Please consider sharing these answers with your network, and thank you for your efforts to #KeepCanadaWorking.