Thursday, August 09, 2018

How the Boys from Texas Suckered an Easy Mark

The Trudeau government was easy pickings for Enron protege, Kinder Morgan, when the company was desperate to unload the TransMountain pipeline and expansion project.

At first the Liberal government tried to induce KM with guarantees and other incentives but the wily Texans knew a mark when they saw it and said no. Finally the government folded and agreed to pay $4.5 billion for the 65-year old pipeline.

The Trudeau government made financial overtures to Texas energy giant Kinder Morgan more than a month before the pipeline operator issued an ultimatum that drove Ottawa to offer billions to take over the troubled Trans Mountain project, according to a new document released by the company this week. 
These previously secret overtures began even though the government had made it clear, during its early negotiations with the Texas multinational, that it didn't want to buy the pipeline and oil tanker expansion project, says the document, a proxy for shareholders that was filed with the United States Securities and Exchange Commission on Tuesday. 
But a timeline included in the proxy shows how the company systematically rejected the government's negotiating position, driving Ottawa to eventually agree at the end of May to buy the rights to the Trans Mountain expansion project and an existing 65-year old pipeline system for $4.5 billion. 
...Kinder Morgan originally estimated that the project, formally approved by Prime Minister Justin Trudeau’s cabinet in November 2016, would cost $4.1 billion. In recent months, this estimate has risen to $7.4 billion, until the new documents this week estimated that the cost could be as high as $9.3 billion until construction is expected to be completed in 2021. 
This total would not include the $4.5 billion offer from the federal government to buy the project, which would mean that taxpayers are now on the hook for spending up to $13.8 billion, with no other investors attempting to take on the risky project.

Economist Robyn Allan estimates the pipeline construction could wind up costing $20-billion.

"The Government of Canada made the decision to make sure this project is built only after completing a detailed analysis, and with the full understanding of the project's economics and future benefits to Canadians," said Morneau's spokesman Pierre-Olivier Herbert, in an email to National Observer. "This is a project with significant commercial value, and represents a sound investment opportunity for Canadians."
[On July 18] the prime minister appointed Amarjeet Sohi as the new natural resources minister, giving him instructions to oversee the completion of the Trans Mountain project. Caron, a long-time environmentalist, will continuing to serve as the new natural resource minister's chief of staff. 
Herbert initially declined to answer further questions about the proxy, referring National Observer to contact Kinder Morgan's Canadian subsidiary, Trans Mountain. The company said in an email that it was unable to provide further information beyond what was in the proxy statement. 
Mackenzie Radan, a spokesman for Sohi, said that the decision on the Trans Mountain expansion was based on facts, evidence and what's in the national interest. 
"Our government made the right decision when we approved this federally-regulated project and we stand by that decision," Radan said.
This position has been contradicted by several public servants who did the research prior to the government's decision, alleging that they were instructed to find a way to approve the project, before the government had concluded its consultations with affected First Nations.
The National Observer report makes plain that the fix was in on the pipeline at least as far back as the rigging of the approval process and that Trudeau misled Canadians on the government's dealings with Kinder Morgan.


the salamander said...

.. my added comment with link 'for Bill' re a previous essay of yours may suffice re backdoor pipeline to Washington State
otherwise Canada will operate a Dilbit 'shuttle sevice' via Afromax supertankers to Washington State or California via The Salish Sea.

Mainstream media has a major problem with the word Dilbit - preferring to call it 'heavy crude' or just plain Alberta or 'discounted Canadian oil' (no news to you, Mound) but bottom line, the shareholders (Canadian taxpayers & stakeholders, First Nations etc) of the Trans Mountain purchase offer were not informed or offered any opportunity to question this deal. However, lots of other (invested & important) people were fully informed..

I could have sworn, Trudeau and Morneau were 'public servants' we elected, paid and fully pension eligible, on our dime as well .. all expenses paid and free rent, limos, security, food.. full staff at beck n call, lawyers out their ying yang.. what do we need to get these folks to respect their electorate? A ball peen hammer, torchlight protests ? BTW I agree with Robyn.. expect it to be 20 billion, not including lawsuits and legal retainers or fees

Anonymous said...

Dump the pipeline.

The Mound of Sound said...

There's no backing out of this now. Trudeau and Morneau went "all in" on TransMountain long before ordinary Canadians had a clue what they were up to. The idea that they might somehow change course while having to face a general election next year is inconceivable. I'm sure they've calculated most Canadians, especially the Liberal party faithful, won't turn on them over some pipeline.

Toby said...

Trudeau and Morneau are a couple of dilettantes. They remind me of those English gits who get elected to the House of Lords or appointed to high positions by rights of privilege who really have no use other than their names. Oh Canada! I mourn for thee.

The Mound of Sound said...

I here that, Toby. As they drove this through behind a curtain of lies they kept bleating out "national interest, national interest." They were conflating their petty partisan interest with the national interest, using the country as their smokescreen.

There are times when Trudeau fails to look much different than Harper.

Hugh said...

The $20 Billion pipeline will be powered by 'clean' electricity from the $10+ billion Site C dam.

Dr Purva Pius said...
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