How Kinder Morgan Played Trudeau Like a Harp

Reuters has done a little digging into how Kinder Morgan manipulated a naive prime minister, panicking him into buying out the slick Texas pipeline company.

Even before the bailout, the company had little to lose - despite the C$1.1 billion it has spent so far on a plan to add a second pipeline from Alberta’s oil sands to British Columbia’s coast, according to a Reuters review of the project’s bank financing and oil-shipping contracts with producers reserving space on the proposed line. 

The documents show Kinder Morgan cut creative deals with lenders and oil producers to shield itself from massive write-downs like the ones taken recently by rivals TransCanada Corp and Enbridge Inc in canceling controversial pipeline projects. 

The arrangements, which have not been previously reported, gave Kinder Morgan unique leverage in threatening last month to walk away from the project by May 31 unless Prime Minister Justin Trudeau’s government guaranteed a path to construction over the objections of British Columbia officials, environmentalists and some aboriginal bands. 

The company’s cautious financial planning and hard-ball politicking combined to create a no-lose bet on what might have been one of the oil industry’s riskiest plays, given the volatility of Canadian pipeline politics. 

...Kinder Morgan’s leverage in the deal stemmed in part from careful risk management in earlier negotiations with the 13 oil producers who reserved capacity in the proposed line. The shippers agreed to cover about 80 percent of Kinder Morgan’s capital costs – even if the second pipeline never gets built, the contracts show. 

The shippers promised to pay those costs over time through tolls on shipments through the existing pipeline, and the contracts included an “early termination” clause to ensure the producers paid even if regulatory problems blocked the project. 

The firm also negotiated with 26 lenders led by Royal Bank of Canada and TD Bank for a clause exempting the firm from paying a 2 percent penalty on funds drawn from up to C$5 billion in construction loans if it halted the project because of political problems, the documents show. 

Another roughly C$220 million in financing, CEO Kean told analysts last month, came from assessments on oil producers shipping through Kinder Morgan’s Westridge export terminal in Burnaby, British Columbia, which is targeted for expansion to accommodate the second pipeline. 

Twelve of the 13 oil producers - including BP Canada, Teck Energy Sales, Andeavor and Canadian Natural Resources - did not respond to Reuters inquiries or declined to comment on their contracts with Kinder Morgan. Canadian oil producer Cenovus Energy did not comment directly on the contracts but issued a statement saying Canada’s oil industry would continue to suffer from low prices and exports without new pipelines. 

...Robyn Allen - a vocal pipeline opponent and retired chief executive of an auto insurance firm - has long predicted the expansion would end in a government bailout. She opposed it specifically for that reason, unlike most other opponents who have cited fear of oil spills. 

The Trudeau administration, she said, is paying C$4.5 billion “for a pipeline that is more than 65 years old” and assuming expansion costs she estimated could run as much as C$12 billion - far more than the firm’s latest estimate of C$7.4 billion. 

By using assets of the existing Trans Mountain pipeline to finance its expansion, Kinder Morgan made the two inseparable in the bailout, Allen said. 

“Now Kinder Morgan’s U.S. shareholders will be made whole,” she said. “They have offloaded all of these costs onto Prime Minister Justin Trudeau.” 

...The government hopes to quickly resell the project to energy firms, a task made much harder by its tortured political history. 

Though Trudeau asserts federal authority to approve the project, British Columbia officials could effectively bog it down for years in environmental studies, lawsuits and regulations that undercut its profit potential. 

Trudeau could theoretically nullify any provincial law that effectively kills a federally approved project under a constitutional provision that hasn’t been used since the 1940s. But that’s unlikely given that his Liberal party relies far more on electoral support from British Columbia than from conservative Alberta. 

The prime minister is already paying the political price. 

“Those of us who knocked on doors for him will not forget that he took billions of dollars from Canadian families to buy out an oil pipeline,” said Tzeporah Berman, deputy director of Stand.earth, an environmental advocacy organization with offices in Vancouver.

We knew from the get go, when Trudeau pushed through the Saudi Death Wagon deal, dismissively calling the heavily armed and armoured combat vehicles mere "jeeps," that when principle clashed with opportunity, Trudeau would go with the money side. We saw that again when his government cut sweetheart deals for KPMG's Isle of Man tax scammers. He's the pretty face of some pretty ugly politics.

There's no reason anyone should have been surprised to see Trudeau outplayed by the sketchy Texans and forced to ride to the rescue of the Athabasca Tar Sands giants and Canadian banks. It's entirely in keeping with the policy of socializing the risks and privatizing profits.

It's Justin's Razor Wire Now

And my old friends, you Stepford Wife Liberals, seem to have fallen mute when your team - Trudeau, Carr and McKenna - have succeeded where Harper, Oliver and Kent tried but failed. Go Liberals, Go.

And not only that but, as Trudeau said on the floor of the Paris climate summit in 2015, "Canada's Back." We are indeed. We're back alright, back to where Harper had Canada. We're a climate change pariah again.

Big Oil Preps Harper for Obama Meeting

Stephen Harper apparently didn't get the message that Obama doesn't want to be pestered about the Keystone XL pipeline.   U.S. officials in advance of the North American leaders summit in Mexico went out of their way to make it clear that Harper should back off. 

So, what did Stevie do?  He attended a meeting with officials of TransCanada to get briefed on what they expect him to tell and ask Obama about Keystone XL.

Taking the Fight to Them

It's time to do what they fear most - connect the dots.   That means linking bitumen trafficking to the plight being inflicted on the poorest and most vulnerable peoples on Earth due to global warming.  It's a link that is irrefutable.

We know that the climate change the world is now enduring is anthropogenic, man-made.   We know that the rapidly changing climate results from warming of the atmosphere, global warming, through burning fossil fuels which generates atmospheric carbon dioxide, a powerful greenhouse gas.

We know that all fossil fuels are not created equal.   Some, such as natural gas, are less carbon-intensive than others.   Others, such as coal and bitumen, are highly carbon intensive and, as such, contribute proportionately far more to anthropogenic global warming.

We know that talk of carbon capture and sequestration remains, after decades of rambling, just that - talk, empty promises.   We know that, despite industry's abject failure to deliver on its carbon capture promise, the federal and Alberta governments are determined to facilitate the rapid and massive expansion of production and export of Athabasca bitumen, one of the world's very worst carbon-intensive fossil fuels.

We know that around the world the poor and vulnerable are being beset by climate change impacts, particularly floods and drought, that bring famine, pestilence, armed conflict, displacement and, to some, death.   And we know this is just beginning.   This is suffering of a degree and on a scale we cannot imagine.

We know that already known fossil fuel reserves exceed the amount remaining that can perhaps be safely burned by a factor of five to one.   In other words, if our civilization is to survive this century - our children, grandchildren and greatgrandchildren, eighty per cent of those fossil fuel reserves will have to be left in the ground.   This utterly discredits anyone promoting the exploitation and consumption of the worst, most carbon intensive fossil fuels.   The planet has more than adequate stocks of relatively clean, conventional fossil fuels.   There is no moral case for exploiting high-carbon intensive unconventional fossil fuels.

We know that the fossil fuel industry behaves as any other corporate entity.  It serves the interests of its investors and shareholders.   It does not serve those interests by voluntarily incurring expenses that are not mandated.   Hence, until carbon capture is mandated and industry is compelled to act, it will not act.  The promise of carbon capture, advanced by industry and our governments, is a shameless hoax.

We must accept that all of this knowledge supports certain, unavoidable conclusions.   Those who promote, enable, extract, produce and transport the most carbon-intensive, filthy fossil fuels are directly responsible for the disproportionate losses and suffering these unconventional fuels create even in distant corners of the world.    It is an immoral trade from which the riches we reap are paid for by those already impoverished and imperilled elsewhere.

Afghan heroin trafficking or Colombian cocaine trafficking inflicts social and economic devastation elsewhere.   It ruins families and destroys lives and we properly condemn it.   Canadian bitumen trafficking also ruins families and destroys lives elsewhere yet we pretend not to notice even as we move to massively ramp up production and export.

To date most opposition to Tar Sands exploitation has been focused on local outcomes - tailing ponds, destruction of the boreal forest, pipeline spills, tanker catastrophes - with scant attention to what Canada is doing to the rest of the world.   It's time that changed and time that the bitumen boosters in Ottawa, Alberta and elsewhere by tied tightly to the suffering they are causing and intend to continue to inflict.   They have to be held accountable.

The Alchemist's Prize

Global warming skeptics always claim to have a gaggle of credible scientists ready, willing and able to refute the Intergovernmental Panel on Climate Change's conclusions about man-made global warming and the climate change dangers that lie ahead.

Here's the truth - they're full of crap.

First you have to leave out the "usual suspects", the scientists who gravitated to the service of Big Oil after years of lining their pockets fighting the good fight for Big Tobacco by spreading doubt about the link between cigarettes and cancer. Sorry, those people are paid liars and about as reliable as jailhouse informants.

Then, take whatever dregs are left over and come up with any credible studies they have produced that disprove the IPCC findings. The catchword here is "credible" as in "peer-reviewed". All that means is that they have published the hard research behind their conclusions so that it can be tested by other scientists and shown to be valid or bogus. That's not too much to ask, is it? We ask that of the scientists whose research, thousands of pages of it, is used by the IPCC in its work.

Now, don't be giving us the old saw about how these skeptic scientists can't come up with the funding that the pampered global warming people enjoy. Think about how stupid that sounds.

Can even you hardened skeptics believe, even for a minute, that Big Oil and Big Coal wouldn't heap immeasurable money onto any scientist able to refute the IPCC and show that global warming isn't a man-made problem arising out of greenhouse gas emissions? No one has a more immediate and direct financial interest in this than the fossil fuel industry and, if you've read any of the reports about their latest quarterly earnings, these companies are literally awash in profits lately.

Big Oil and Big Coal would pay anything to the alchemist who could allow them to get the global warming and climate change and greenhouse gas emissions problems off their backs. The only thing is that coming up with any credible rebuttal is as hard as turning lead into gold.