Workers lay pipe during construction of the Trans Mountain pipeline expansion on farmland, in Abbotsford, B.C., on May 3.DARRYL DYCK/The Canadian Press
Representatives from 120 Western Canadian Indigenous communities are set to begin meetings with the federal government next week aimed at acquiring minority interest in the Trans Mountain oil pipeline.
The discussions, which could stretch over months, represent the first part of a two-phase process that Ottawa is leading to sell its full ownership of the 1,150-kilometre pipeline. Trans Mountain Corp. is nearing the finish of an expansion to nearly triple the line’s capacity, a project that has been hit with a series of delays and cost overruns.
The meetings are scheduled to begin in Vancouver, involving at least two delegates from each of the communities, which would make up a group that could own a more than a 20-per-cent stake after receiving federal funding, said Steve Mason, managing director of Project Reconciliation. The organization is one of a handful of bidding groups that have formed over the past five years that aim to secure economic benefit from the project for Indigenous people. It will not be involved in the first phase.
A government source said no potential percentage range has been decided yet, so discussing figures is premature. The Globe and Mail is not naming the source because they were not authorized to speak publicly about the matter.
“The understanding is, they’re going to create a special purpose vehicle, and once they’ve got all 120, or just a portion of those, they will allocate ownership of that special purpose vehicle to those communities,” said Mr. Mason, who received a letter from Finance Minister Chrystia Freeland outlining the process.
It may appear on the surface that the special purpose vehicle will be given this interest as a gift, Mr. Mason said. But he said the entity would also assume a proportional percentage of the debt that piled up as the price tag for the expansion has ballooned to $30.9-billion from $7.4-billion in 2017. That would result in negative equity at the start, Mr. Mason said.
It is not yet known whether future shipping tolls will be renegotiated to make up for some of the cost escalation.
The Government of Canada first announced its intention to explore the possibility of Indigenous economic participation in the Trans Mountain Expansion Project (TMX) in March, 2019,” said Katherine Cuplinskas, spokesperson for Ms. Freeland. “The federal government is undertaking conversations with Indigenous communities about economic opportunities related to Trans Mountain.”
Project Reconciliation, meanwhile, has lined up its own financing and aims to bid for the remaining interest in Trans Mountain as part of Ottawa’s second divestment phase, he said. It has also formed an affiliate that is expanding into other energy and energy transition projects. Chinook Pathways, a partnership between Western Indigenous Pipeline Group (WIPG) and Pembina Pipeline Corp., is also vying for a piece of Trans Mountain.
Trans Mountain is Canada’s only pipeline system for transporting oil to the West Coast. The first phase was completed in 1953, and the line can currently ship 300,000 barrels of oil a day to Burnaby, B.C., from the Edmonton area.
The federal government bought the pipeline for $4.5-billion in 2018 from Houston-based Kinder Morgan Inc., which had threatened to scrap the expansion because of court challenges and opposition from environmental groups. The government of Prime Minister Justin Trudeau has said from the start it doesn’t intend to be a long-term owner.
Ottawa said in August it would support Indigenous communities with access to capital, meaning communities would not need to risk or use any of their own money to participate. It said taking part in the sales process would not prevent Indigenous communities or Indigenous-led proponents from participating in a commercial divestment process to acquire additional equity in Trans Mountain.