Finance Minister Bill Morneau said Wednesday he is prepared to protect the Trans Mountain oil pipeline expansion to the west coast against financial loss.

The Trudeau Liberals have been in discussions with Alberta as well as the proponent of Trans Mountain, Kinder Morgan, over an arrangement to use public money to back the pipeline.​ British Columbia NDP Premier John Horgan, however, has pledged to use all legal tools available to block its construction.

Morneau did not put a price tag on the commitment that was quickly characterized as a "blank cheque" by both an environmental group and the federal NDP leader.

"We are prepared...to indemnify the project against any financial loss that derives from Premier Horgan's attempts to delay or obstruct the project," Morneau said on May 16 at the National Press Theatre in Ottawa.

Indemnity refers to a financial instrument where one party agrees to be liable to pay money or perform an obligation against an anticipated loss.

"This indemnification would allow Kinder Morgan to finish what they started, what they received federal and B.C. provincial approval to do," said Morneau.

Morneau also said if Kinder Morgan decides not to proceed with Trans Mountain, "the indemnification would still be in place for another party who might wish to take over the project."

“We think plenty of investors would be interested in taking on this project, especially knowing that the federal government...is willing to provide indemnity to make sure it gets built,” said Morneau.

He didn’t elaborate on what other parties might be interested. There is already a Trans Mountain pipeline in use since 1953; the expansion project would triple the capacity of oil and other petroleum products shipped from producers in Alberta's oilsands, up to 890,000 barrels per day, to a terminal in the metro Vancouver suburb of Burnaby, B.C.

Reaction across the country was swift and sharp. Grand Chief Stewart Phillip, president of the Union of B.C. Indian Chiefs, said “Canada cannot indemnify against the risks of not respecting Indigenous Title and Rights."

Meanwhile, Alberta NDP Premier Rachel Notley called Morneau's statements an "important step" as she brandished a new law to restrict energy shipments to B.C., saying she was "ready and prepared to turn off the taps."

Ian Anderson, Kinder Morgan Canada, Vancouver Board of Trade, Trans Mountain expansion
Kinder Morgan Canada president Ian Anderson delivers a speech to a business crowd in Vancouver on Nov. 3, 2016. File photo by Elizabeth McSheffrey

Kinder Morgan says it's 'not yet in alignment' with feds

Talks aren't over yet with the Texas-based energy company, and Morneau said the government was “striving to get an agreement by the May 31 deadline," referring to the date after which the company has warned it will likely pull out of the project. He repeatedly declined to discuss the substance of negotiations.

Following the announcement, Kinder Morgan Canada, which is holding its annual general meeting today in Calgary, issued a statement saying "while discussions are ongoing, we are not yet in alignment and will not negotiate in public."

"We acknowledge the comments by Minister Morneau this morning and appreciate his acknowledgement of the uncertainty created by the B.C. government's stated intentions," said chairman and chief executive officer Steve Kean.

​"We remain steadfast in our previously stated principles: clarity on the path forward, particularly with respect to the ability to construct through British Columbia, and ensuring adequate protection of our (Kinder Morgan) shareholders."

Multiple environmental groups also issued statements, labelling Morneau’s announcement as “desperate."

“Today’s announcement was a pledge to write a blank cheque, backed by public money, to a Texas oil company in a desperate play to bailout a pipeline that violates (Prime Minister) Justin Trudeau’s own promises on climate change and Indigenous rights,” said Aurore Fauret, a campaign coordinator with 350.org.

Tzeporah Berman, campaigns and communications director for Stand.earth, called it “a desperate attempt by the Trudeau government to use taxpayer money to bail out a collapsing project.”

Alberta Premier Rachel notley on Parliament Hill on April 15, 2018. Photo by Alex Tétreault

Federal, Alberta NDP leaders clash over pipeline

Federal NDP leader Jagmeet Singh made his opposition to the pipeline clear a few hours after Morneau's press briefing.

Singh tweeted that the "Liberals are giving Texas oil company #KinderMorgan a blank cheque while dumping all the risks on Canadians...it's clear this pipeline should not be built."

But Notley rejected Singh's comments in comments to reporters from the Alberta legislature later on Wednesday.

"I think we disagree quite fundamentally," she said. "I don’t think that the positions of Mr. Singh necessarily reflect the vast majority of opinions in the NDP across the country."

She said the provincial government was focused on its "responsibility to current and future generations to make real progress on stopping climate change" but that it would fail in this effort if it tossed "working people to the side as collateral damage."

Notley also said her government was poised to pass Bill 12, which will give Alberta the ability to restrict energy shipments.

Once the bill passes, the provincial Cabinet will also have to approve regulations, and the government will have to issue licenses and talk with oil or other energy shippers before it can take action.

The premier said Morneau's comments revealed that Ottawa would "fully backstop the project." She also acknowledged that Kinder Morgan and Ottawa don't yet see eye-to-eye.

“I think there is still work to do...if there wasn't, we'd be announcing a deal today," said Notley.

Finance Minister Bill Morneau speaks to reporters in Ottawa on May 16, 2018. “A project that was federally and provincially approved is being thwarted — on purpose — by Premier Horgan," he said. Photo by Patrick Doyle / The Canadian Press

Morneau sees Ottawa's role as breaking standoff

The minister's comments reinforce how similar he, and the executives at the Texas-based energy company, see the role of the federal government in this situation.

Kinder Morgan made it clear last month that it sees the federal government’s role as breaking the impasse created by Horgan.

On a conference call in April, a day after the company issued its end-of-May ultimatum, Kean had called for “some kind of preemptive action” from Ottawa that stops B.C. from wielding its jurisdictional authority.

“We’re a private firm, we do the things that we should do for the investors that we serve, ”said Kean. “These are government entities, obviously, the federal government and the provinces — we don’t have control over that, or control over timing...we don’t have the power to convene governments.”

Morneau gave a similar explanation of the situation on Wednesday in Ottawa, saying he had found a way to “deal with the political risk.”

“The extraordinary situation we find ourselves in here is that a project that was federally and provincially approved is being thwarted — on purpose — by Premier Horgan, trying to create delays and uncertainty,” he said.

“That specific risk is a risk that, for a private sector player, is impossible to deal with. They can’t negotiate between governments. We see that as something that we can actually indemnify,” Morneau continued.

“Other business risks are other business risks. Anybody going into the business of building pipelines recognizes other risks to them.”

Kinder Morgan, pipeline protest, Trans Mountain expansion, Burnaby, National Energy Board
Chief Phil Lane, Chief John Ridsdale, Chief Dziggott, Harriet Prince and Linda Blackelk lead a protest of thousands against Kinder Morgan's Trans Mountain expansion project in Burnaby, B.C. on March 10, 2018. Photo by Trevor Mack

Minister touts 'rigorous environmental assessment'

Morneau repeated over and over that he believes that the project is “commercially viable.” He also said it was in the “collective best interest” of Canadians, both environmentally and economically. The project is expected to create 15,000 jobs, Morneau said, including 9,000 in B.C.

“We see ourselves in a situation where we’ve got a project that has been federally approved after a rigorous environmental assessment. We’ve moved forward as part of that assessment with a world’s-best, $1.5 billion Oceans Protection Plan,” he said.

The government’s approval of the project, however, has been under scrutiny ever since National Observer reported that high-ranking public servants in the federal government discussed speeding up the review of the expansion project, and federal government sources allege that the process was rigged following Kinder Morgan lobbying.

The Alberta oilsands, deposits of a tar-like heavy oil mixed with clay beneath the boreal forest in Alberta and Saskatchewan, represent the third largest reserve of crude oil in the world. But oilsands extraction is costly and energy-intensive, and oil producers in the region have struggled to compete in international markets.

The federal and Alberta governments have said that a pipeline to the coast would help get Canada’s oil products to market in an environmentally responsible way, and be part of a transition plan needed to allow Canada to meet its climate change goals.

But opponents say Canada will never be able to meet its climate goals unless it stops expansion of the oilsands industry.

Squamish Nation councillor Khelsilem speaks at a press conference held by the Treaty Alliance Against Tar Sands Expansion on May 2, 2018. He said 'we're seeing the beginning of what will become the largest civil disobedience in Canadian history.' Photo by Alex Tétreault

'Of course we recognize people’s democratic right'

The Treaty Alliance Against Tar Sands Expansion, for example, which was joined on May 2 by Ontario First Nations chiefs against the Trans Mountain pipeline expansion, says the risk of an oil spill in waters or lands is too great, and oilsands expansion is an obstacle to solving the climate crisis.

Protests by Indigenous leaders and environmental activists in metro Vancouver is also what drove the company to suspend construction activities last month. Hundreds of people have been arrested at the site of a Kinder Morgan terminal.

First Nations are engaged in an ongoing legal challenge at the Federal Court of Appeal over whether the Crown adequately consulted First Nations before announcing its approval of the pipeline expansion in 2016.

Documents uncovered by National Observer have led to a motion filed by lawyers for the Tsleil-Waututh Nation in that case, arguing that the government has been sitting on evidence.

“Morneau is attempting to lay the blame for the potential failure of this project at the feet of B.C. Premier John Horgan, while avoiding addressing the real risk of First Nations legal challenges and ongoing protests," said Stand.earth strategy director Karen Mahon.

Asked how the government could indemnify the pipeline when there was still legal uncertainty, Morneau noted how the government was “engaged with people in the Indigenous community and other Canadians to make sure that we’ve heard their points of view.”

“There were 157 conditions for this project that are being satisfied. Of course we recognize people’s democratic right to put forward their points of view,” he said.

“But this project has been federally and provincially approved, and we are going to deal with the risk presented by Premier Horgan, the exceptional risk of going against what is we see a federal jurisdiction.”

Editor's note: This story was updated at 12:47 p.m. ET on May 16, 2018 to include additional comments from Morneau, as well as reaction from 350.org and Stand.earth, and additional context. It was updated again at 1:20 p.m. ET the same day to add Kinder Morgan's reaction. It was updated a third time at 2:37 p.m. ET the same day to add reaction from Notley and Phillip, and photos.

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Comments

Once again the government has caved in to craven bullying and threats by Killer Morgan. How long will the long suffering taxpayers put up with this endless corporate welfare? When do we say enough is enough. If this project was in the "National interest" as all levels of captive government have stated, why would we need to bail them out? Is it more about "saving face" then actually being accountable to taxpayers and Indigenous peoples who will bear the brunt of environmental disaster, when the pipeline leaks or when the tankers run aground? This smooching of the corporate derriere is a bit much for this Canadian taxpayer to handle.... I guess we can begin again to be hewers of wood, and haulers of water. Just remember, slaves are never happy...and some have long memories, especially at election time.

The government has not caved in- it has just affirmed the neoliberal position they've always had; that corporate welfare will take precedence over the welfare of their own country and citizens. These people are despicable and this bail out is nothing short of treason. Also, I think that Notley should be kicked out of the NDP- she has shown her true color and it definitely not orange.

The government has not caved in- it has just affirmed the neoliberal position they've always had; that corporate welfare will take precedence over the welfare of their own country and citizens. These people are despicable and this bail out is nothing short of treason. Also, I think that Notley should be kicked out of the NDP- she has shown her true color and it is definitely not orange.

How are they planning to indemnify Kinder Morgan when the Courts quash the Pipedream for grossly inadequate consultation with First Nations as per Section 35 of the Constitution?

Makes me wonder. At this point, Kinder Morgan's game plan may not even be to build the blasted thing. Just keep on moving the process along spending as little as possible until the right obstacle shows up, then gulp down a whole lot of federal "indemnity" cash, pass it along to the shareholders and fold the Canadian subsidiary that's holding all the pipeline-related debt.
Playing along with this would make the Trudeau government either naive or very cynical and corrupt. Or maybe Trudeau himself naive, and certain top political operatives cynical and corrupt.

An excellent question....perhaps Trudeau has suceeded where Harper failed....and got those 'activist' judges in line? At some point we're going to have to recognize that many of our best policies are on paper only. Like consulting with indigenous people....its a beautiful idea, if only those indigenous folks could see themselves to agreeing with our extractivist schemes.

But when they don't...we just have to find some way around them....and, eh....some way through their land.

Socialize costs, privatize profit. As usual: We pay, they get the money. Wasn't the private sector supposed to be all entrepreneurial risk takers?
Be bad enough if it was our own bloodsuckers, but Trudeau wants to send billions of dollars out of the country so foreigners can poison us better.
Let's say he bails out the pipeline to the tune of, say, $8 billion. How many jobs in wind and solar would $8 billion buy? Let's say jobs paying $60,000/year plus related expenses of $40,000/year and for some bizarre reason no revenues or multiplier effect. That would be 1 million dollars per 10 year job, or 8,000 jobs for 10 years--probably more than the pipeline would have employed. With multipliers, probably 20,000 jobs; with revenues paying just half the expenses, 40,000 jobs. Plus you'd end up with a whole lot of clean power or increased energy efficiency. But no, instead he's going to give the dough to billionaire Texans so they can make tar spills. In the "national interest" of course.

Or he thinks thats what he's going to do. The logic is pretty impeccable...he's counting on the Canadian taxpayer (dumb clucks that many of us are) to turn on the people who will continue to protest....instead of on the government that is going to use our tax dollars to keep fossil fuels flowing well into armegeddon.

Enjoying those floods aren't we? And wait!!! When those dry up, we can look forward to the fires. Apparently, in carbon tax avoidant Saskatchewan, they are already well under way.

So the money we pay hoping for good social policy and a future for our children is going to go down the tubes of more fossil fuel extraction............and environmental disaster clean up.

And I haven't even calculated in the money we're going to have to spend cleaning up Alberta from the god awful mess they've left behind....in tailings ponds and unclosed old well heads.

Tax relief? Liars like Kenny can promise it, but I don't see any in sight. Unless we just abandon everyone caught in a climate disaster.....call it an 'act of god', 'collateral damage of Big Fossil Fuels", or the vicitms own damn fault. Now there's a platform waiting for some ambitious Con.

It's a bad investment for the Canadian taxpayer .
The oil sands project is not competitive in the first place. So everytime there is a glut of oil on the world market they can't even sell the oil at cost . It's a bad business deal for Canadians especially when the federal government's already subsidizes the oil companies !!!

If Morneau and the Liberal government are truly interested in creating jobs in Canada and protecting the environment, they would be investing the billions of dollars that they plan to give to Kinder Morgan into high speed trains. Canada is the only G7 country that does not have a high speed train and the route between Calgary and Edmonton could be a good start. We could also use our own Bombardier to build the trains creating more employment. Maintaining a high speed train would create lasting employment unlike a pipeline. The environmental benefits are obvious; taking cars off the road would help Canada meet its Paris Climate goals and we could finally begin a serious transition off of fossil fuels!

That would be amazing. Plus a Toronto/Ottawa/Montreal route. Support our own companies, provide long term jobs and get people to where they want to go. sounds like a win-win to me.

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