Ownership tussle accelerates as First Nations join Pembina alliance
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Gary Park for Petroleum News
The turbulent history of Canada’s Trans Mountain pipeline project has shifted in a new direction with a major energy company and a First Nations-Metis alliance forming a partnership to bid for outright ownership of the system.
Pembina Pipeline and the Western Indigenous Pipeline Group, WIPG, announced Chinook Pathways hopes to buy out the Canadian government ownership of Trans Mountain.
The deal would carry an estimated value of about C$17 billion once expansion of the pipeline from the Alberta oil sands to an export terminal in the Port of Vancouver is completed by late 2022.
The government’s Trans Mountain Corp. reported earlier in June that work to triple the pipeline’s capacity to 890,000 barrels per day of crude bitumen pushed the project to 25% completion in the first quarter, with capital spending having reached C$7.1 billion of the estimated completion budget of C$12.6 billion.
Competition Chinook Pathways has taken the boldest step so far to determine the eventual fate of Trans Mountain, but it is not without competition.
A rival Indigenous-led contender for the pipeline, Project Reconciliation, said it also aims to own 100% of Trans Mountain once the expansion phase is over.
The federal government has yet to give any indication when it will be open to formal bids.
WIPG is a coalition of First Nations and Metis communities along the 700-mile pipeline route, which Chinook Pathways believes would benefit from teaming up with an established pipeline company that WIPG Executive Vice President Michael LeBourdais said would help provide the control and oversight that Indigenous communities would need for any equity investment.
He said the interest “is in working together with Pembina to monitor the pipeline. When you ask First Nations what is important, it’s always the environment. Money comes in third or fourth.”
LeBourdais said WIPG has attracted about 30 First Nations to its coalition and hopes to eventually have almost 80.
He said the Canadian Imperial Bank of Commerce, one of Canada’s five largest banks, is acting as financial adviser to WIPG, while inquiries have been received from a number of prospective investors.
Opposition Despite this level of optimism, many First Nations remain rigidly opposed to the pipeline expansion, pointing to environmental risks such as spills, the impact on water supplies and the fear of a threat from oil tankers to the survival of killer whales on the Pacific coast.
Robert Morin, chair of Project Reconciliation, said his group is targeting an initial 75% ownership.
Separately, another insurance company - the Argo Group International Holdings - said it will not renew a policy with Trans Mountain that expires in August.
It said the TMX project is “not currently within Argo’s risk appetite,” echoing a similar decision by Zurich Insurance Group amid pressure from environmental and Indigenous groups.
In a statement, Trans Mountain said it currently has all of its required insurance in place and is committed to “providing the Canada Energy Regulator with full information about our financial resourcing and ensuring Canadians know that we are sufficiently insured” against claims up to C$508 million.
- GARY PARK
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