Wednesday, May 23, 2018
No Takers for Pipeline? What's the Surprise in That?
To hear Bill Morneau tell it, potential buyers would be falling all over each other to take over Kinder Morgan's Trans Mountain pipeline. Apparently not. There is no queue. Nothing on the horizon.
There are many reasons for investor indifference. Kinder Morgan says it has orders for two-thirds of the Trans Mountain capacity. Really, from whom?
Asia? Three year contracts? Endless renegotiation and uncertainty? The prospect of bitumen becoming a "stranded asset"? The announcement by OPEC that it may open the taps again to drive current high oil prices back down? I don't know, what's not to like?
Then there's that business about never leaving money on the table. For this pipeline, it's a buyer's market. Trudeau and Morneau have revealed that Ottawa is willing to offer financial incentives to see this pipeline through to "tidewater." Any potential buyer for this has to be wondering how hard they can grind the Trudeau government and they are definitely going to squeeze Ottawa for everything they can get. They're not going to settle for the wallet. They want the diamond ring and the Rolex too.