It ain’t that hard when you’re dealing with the dullest pencil in the box.
In a desperate bid to keep its last remaining proposed oil pipeline alive, Canada has decided to buy Kinder Morgan’s Trans Mountain Pipeline system for an estimated C$4.5 billion.
Canada will pay Kinder Morgan for the money that the company has already spent on the expansion project as well as for the existing Trans Mountain pipeline, which has a capacity of about 300,000 bpd.
Trans Mountain runs from Alberta to British Columbia and the proposed expansion would be a twin line that would triple the system’s carrying capacity to 890,000 bpd. British Columbia has vowed to block the pipeline even though the federal government supports the project. BC’s opposition had nearly killed the project…and still might finish it off despite the gamble by the federal government to nationalize the pipeline system.
As Reuters discovered, it appears that Canada has been taken for a ride by Kinder Morgan. The Texas-based pipeline company structured deals in such a way that it couldn’t lose, even if the project stalled. “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,” Reuters wrote.