Canada's largest oil-producing province is willing to put up C$2 billion if the federal government has problems with completion of a C$7.4 billion expansion of a pipeline it is acquiring from Kinder Morgan Inc.
Alberta's government will seek an equity stake in the pipeline expansion if the backstop is needed, according to a May 29 statement. The provincial contribution would only be payable in "unforeseen circumstances" and on completion of the project to boost the capacity of the Trans Mountain pipeline to 890,000 barrels per day from 300,000 bbl/d.
Canada's federal government plans to buy Trans Mountain from Kinder Morgan Canada Ltd. for C$4.5 billion after the company's Houston-based parent threatened to walk away from expansion project because of jurisdictional disputes between the federal government, the province of British Columbia and First Nations groups. Canada stepped in with its offer claiming abandoning the project would choke exports of oil sands bitumen from Alberta and hurt the nation's economy. The federal government is seeking a private buyer for Trans Mountain before the deal closes in the third quarter. Alberta's provincial government depends on royalties from oil sands production to bolster its finances.
"Alberta's contribution would range from zero to a maximum of [C]$2 billion, and would be payable only upon completion of the project," the province's statement said. "If Alberta's backstop is called upon, Alberta will receive equity in the completed project."
The Alberta contribution would maintain existing profit sharing or other agreements that Kinder Morgan reached with First Nations groups along the expansion's right of way. Canada's government has vowed to see construction start on the project this summer. Work to prepare Kinder Morgan's Westridge Marine terminal for construction earlier this year was met by protests that saw hundreds of people arrested in the community of Burnaby, British Columbia, the western terminus of Trans Mountain.
